America's Perceptions of Europe

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Author: Leif Johan Eliasson

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America’s Perceptions of Europe

Previous publications Handbook of Military Administration with Jeffrey Weber (2007).


LEIF JOHAN ELIASSON

AMERICA’S PERCEPTIONS OF EUROPE

Copyright © Leif Johan Eliasson, 2010. All rights reserved. Cover photo and map of the European Union in chapter 3 are from the Audiovisual Library of the European Commission, © European Communities, 2009 First published in 2010 by PALGRAVE MACMILLAN® in the United States—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–10004–6 Library of Congress Cataloging-in-Publication Data Eliasson, Johan. America’s perceptions of Europe / Leif Johan Eliasson. p. cm. Includes bibliographical references and index. ISBN 978–0–230–10004–6 (alk. paper) 1. Europe—Foreign public opinion, American 2. Europe—Relations—United States. 3. United States— Relations—Europe. 4. Public opinion—United States. 5. National characteristics, European. 6. Europe—Politics and government. 7. Europe—Social conditions. I. Title. D34.U5E44 2010 940.56—dc22

2009043568

A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: July 2010 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

Dedicated to Leif and Ulla, thank you for everything.

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Contents

List of Figures and Tables

ix

Foreword

xi

Acknowledgments 1 2 3 4 5 6 7

8

The Global Engine That Keeps on Going, and Going, and Going Misperceptions, Myths, and Justifications Explained Simplifying the Confusing: The “Short-Short” of Europe and the European Union Attractive, Determined, and Competitive: Socialism Has Ceased to Be High-Tech Gizmos, Web-Surfing, Cells, and Not-So Green Power The Things We Want in Life: Health, Security, Work, Culture, and Quality Europe’s Global Tentacles Reach You Everywhere: Trade, Law, Business, Armaments, and Military Operations Kant and Uncle Sam: Competition, Coordination, and Cooperation

xiii

1 9 25 35 61 73

119 141

Appendix A: Figures and Tables

159

Appendix B: Survey of American Students’ Views and Ideas of Europe

167

Notes

181

Index

215


Figures and Tables

Figures 3.1 Map of the European Union 4.1 Businesses with less than 20 employees A.1 Contribution of renewables to energy supply as a percent of energy, 2007 A.2 Average advertised download speeds, by country A.3 Social spending % of gross domestic product, 2006 (private and public) A.4 Total corporate taxes A.5 Total public spending on pensions, 2006 A.6 Starting a business A.7 Media sources and trends B.1 College survey results B.2 College survey template

26 48 159 160 160 161 162 162 163 168 174

Tables 2.1 3.1 4.1 4.2 5.1 5.2 6.1 6.2 6.3 6.4 7.1 7.2

European Union, United States, and China Division of responsibility in the European Union European economic data Income and inequality Research and patents Computer and cell phone use Government should care about the poor Public opinion on freedom and liberty Health data Views on immigration Public opinions on trade Troops deployments and opinions on use of force

15 31 46 55 63 66 80 83 86 105 122 136


Foreword

This is an unconventional book written for the ordinary citizen by someone who loves the United States. The desire to write this book has been with me for more than a decade, lingering in the back of my mind while life required other tasks to take precedent. After completing my doctorate, initial years of service with East Stroudsburg University, and a book on military administration with my good colleague Jeffrey Weber, I decided this project could wait no longer. My motivation stems from two separate yet related sources. After four decades of living, studying, working (in the private and public sectors, and minimum wage jobs), and traveling on both sides of the Atlantic, in poor and rich neighborhoods (including some of the most ethnically diverse areas on both continents), I never cease to be amazed at the general lack of knowledge in the United States about its closest ally, and for most Americans, ancestral home. There are so many distorted, and even completely false, beliefs about Europe prevalent in the United States when I find myself discussing European society and policies with American friends, acquaintances, colleagues, or other professionals; or overhearing discussions at cafes, reading, or listening to popular media sources, or teaching an international relations course, myths, misperceptions, simplifications, or simply blatant inaccuracies, prove ubiquitous. The most basic of economic and social facts are either ignored or skewed, with many commentaries describing at best the Europe of the 1950s rather than 2010, and at worst an imaginary continent. Invariably, when I discuss with friends and colleagues some of the stories in the press, student comments, and responses from residents to my occasional contributions to our regional newspaper, they often erupt in what can best be described as a mix of astonishment, disbelief, and, not uncommonly, uncontrollable laughter, before questioning how so many people can be so ignorant of reality and dismissive of facts. The second source of motivation is my love of this country, the principles on which it was founded and has thrived, and the people who carry this country forward today. The liberty, freedom, and opportunities that

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Foreword

exist in the United States are fantastic. The United States is unquestionably the most successful example of how people of varied characteristics and diverse roots have coalesced around a set of enduring values; surviving challenges that would have undone most nations. I wish to contribute to strengthening our role in the world by way of clarifying how our most important partner thinks, works, and acts, and where and how we may cooperate or coordinate with, learn from, or serve as a model for, Europe. Although the subject matter discussed is serious, the style of presentation, as well as the narrative, is purposefully unusual. I take you beyond screaming headlines, pundits’ misleading talking points, ideologically founded misrepresentations and distortions of Europe presented daily as unquestionable truth to millions of Americans. Irrespective of age or background, the discussion aims to demystify and explain to you, in a straight forward and (almost) jargon-free manner the reality of contemporary Europe, and the conduct of its governments and people. In the process it will also become clear how important Europe is to the American economy and its security, far more than any other region or country. It affects your life, and that of tens of millions of other Americans, daily. I am fortunate to have the opportunities to share with you the realities of Europe, and I hope you enjoy this book.

Acknowledgments

Nothing in life can be properly accomplished without assistance and support. This book would never have reached you had I not received a Faculty Development Grant from East Stroudsburg University. This grant enabled me to conduct interviews, attend panel debates, and speak with regular people throughout Europe, and to meet with officials in Washington DC. The grant also enabled a survey of college students (see appendix B). I benefitted greatly from the help of Elena Brooks, a graduate assistant also provided for through the East Stroudsburg University grant. Elena collected numerous data for my chapters and compiled the surveys. The feedback from colleagues who patiently read drafts of chapters was also invaluable. Special thanks to Jeffrey Weber, Kenneth Mash, Patricia Crotty, and Shannon Frystak. Rebecca Jones provided helpful and grounding feedback on ideas I had, even when they seemed less than feasible. Graduate assistant Matthew Wagner helped with editing and the index. Matthew hopefully learned a thing or two about the tedious task of proofing and editing, and that no matter how many eyes read over a piece there may still be errors or omissions. The editors at Palgrave Macmillan also deserve much praise for speedy assistance and helpful advice. Most importantly, this project would not have come to fruition without the support and understanding of someone willing to put up with my 60–70 hour work-weeks throughout most of 2009, my wonderful wife Christine. All the help notwithstanding, any remaining mistakes are my own.


Chapter 1 The Global Engine That Keeps on Going, and Going, and Going

“European socialist communist run healthcare will tell you what doctor to see and has lengthy waiting periods”; “Europeans are less happy than Americans because they are less free.”1 European citizens—from Ireland to Poland to Italy—reading this would likely either laugh or cry; either way, they would not recognize their continent or their particular country in either statement. As discussed in later chapters, Europeans enjoy long life expectancy, extensive civil liberties, private hospitals and doctors, and are some of happiest people on earth; Europeans are doing fairly well. But are Europeans not taxed like crazy? Well, the top 10 percent of British, French, and Swedish income earners contribute less tax revenue to the government than do their American equivalents. I understand if this is surprising. Headlines of China rising, Europe falling, and India challenging everyone have filled papers and book covers since the turn of the century. More than half of the American college students I surveyed as part of this book project believed China is more important than Europe (see appendix). However, headlines and truth do not always agree. Therefore, armed with straight-talk and eye-opening facts, I step into this ill-informed, news-fed maelstrom, to counter prevalent myths, rectify misperceptions, and correct distortions about this prosperous region across the Atlantic that more than any other region directly affects prices on goods in American stores, job growth in major sectors of the United States, and the global economy, as well as international trade, security, and stability. Wait a minute. Europe? Really? This bastion of culture, ideology, and wine, but also of communism, fascism, and warfare; a continent which the United States was instrumental in twice liberating? The region whose

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history American students study because it is the cradle of ideology, governance, and, still, most of our ancestors, but which today is predominantly thought of as favorite vacation destination? Sure it has some household names, businesses such as Conoco-Philips, Siemens, BMW, or Nokia, and of course the world’s financial capital (London), but is it not full of welfare dependents and socialized policies? Is Europe not so blasé? So “yesterday”? It must be far less important to us in America today than when the Soviet Union was pointing missiles at us and threatening global stability, correct?

Objectives If ordinary, hard-working, Americans knew the importance of Europe to their own, and global, well-being; if the media talking heads, with millions of followers, were not distorting facts and disseminating myths about Europe, this book could be considered superfluous. However, this is not the case. Even elected representatives at times stand in the people’s house and completely misrepresent the facts to score cheap points domestically. As discussed in the next chapter, a distorted picture of the world’s largest economy, with the highest valued currency, and common institutions that decide on everything from the size of strawberries to mobile phone charges; which sets international standards for accounting and toy safety, distributes more than half of global aid, sends civilian and military personnel into conflict zones across the globe, and can approve or deny American business mergers, can easily lead to mistakes. Citizens elect decision makers whose actions affect peoples’ daily lives, and citizens make better choices, and avoid falling for distorted advocacy, if they better understand the functioning and preferences of the largest buyer and foreign supplier of goods, services, and jobs in the United States, namely Europe. Clarifying misperceptions held about Europe is admittedly a challenging task, but let me assure skeptics: this book is not a whole sale advocacy of all things European, or a sermon on how we must unquestioningly follow their lead. In fact, it is often the opposite. Furthermore, if a majority of Americans want to support policies that cut us off from much of Europe and other countries by restricting trade, closing immigration, and recalling troops from abroad, or any other policy change, large or small, it is their right in a free and democratic society. But a better, more prosperous, democracy begins with, and is sustained through a well-informed citizenry (further explained and justified in chapter 2) who know the true consequences of their actions. Thus, it is your prerogative to accept, challenge, or dismiss the evidence; I can only hope to promote a better understanding, an improved

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level of debate, and naturally, where appropriate, a more accurate criticism of European policies.

No Prerequisites Required—No Degree Necessary This text is intended for the ordinary citizen. Whether working or a college freshman taking an introductory course in European politics, American foreign policy, or international relations, the purpose here is to present in common language what Europe is really doing and how influential Europe, European policies, and businesses, really are to Americans’ well-being. Unlike most books on transatlantic relations, or textbooks on Europe aimed at American students, this book has neither extensive theoretical analysis of international relations, social construction, political integration, or political economy, nor is it laden with jargon and abbreviations. I do not seek to explain the root causes of identity construction (of how Americans view themselves relative to others), social perceptions, or the underlying assumptions of various economic models. That said, rigorous scholarly research is the foundation of much of the information conveyed in this book. Along with colleagues across the globe I too engage in scientific analysis (theorizing and analyzing social, political, and economic developments, testing hypotheses, and presenting at conferences) because that is how we cumulate knowledge and improve our understanding of the complex society in which we live. But social progress requires that knowledge be shared in ways that ordinary people understand. Just as most medical studies are barely comprehensible to a lay person, often social science work is packed with specific terminology and abstract lingo. Convinced that one can present research and data using a straight-forward, jargonfree approach, sprinkled with humor and anecdotal evidence (conveyed through interviews and personal experience), but without compromising substantive accuracy, I hope you find the text intellectually stimulating and thought provoking, as well as entertaining.

Methods, Numbers, People, Problems One of the beauties of advanced economies is the abundance of available data on everything from number of automobile sales, to the number of TV sets owned, to survival rates for 30 different types of cancer. One can

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write a book on Europe (or the United States) by simply filling pages with tables, graphs, and figures. That would be intriguing for a statistics-junkie, and I admit to occasionally exhibiting signs of carrying this relatively rare gene, but for most people such a book would be excruciatingly boring. The few tables and graphs included in this book are easily understandable and contain information infrequently presented elsewhere, for examples data on cell phone use, broadband download speeds, deaths from diabetes, or military troops in Kosovo. The data comes from international organizations, governments, and independent research centers, and when you find data that particularly interests you I encourage you pursue the sources and links provided. You may find a whole host of interesting and eye-opening stuff! I cite public officials and news makers, political pundits, writers, and commentators from across the United States and the globe, and use arguments from publicly available sources, providing you with the information needed to verify them. I also draw on my many years living and working in Europe, scholarly research trips, as well as the numerous occasions on which I have taken American college students to Europe, all while teaching in the United States. As part of writing this book I travelled throughout Europe in May 2009, talking to Americans residing in Europe for business, studies, or pleasure. I wanted to hear how their experiences compared to their pre-arrival perceptions and expectations. Europe, as discussed in chapter 3, is both a compilation of countries, many with long and rich histories, and, for most countries, a union with no internal borders and common institutions. Comparisons with the United States, prevalent in all academic and policy research, appears natural and appropriate, but it also poses some problems. First, in our federal system there are national laws, direct, specific, and applicable everywhere (e.g., immigration, federal taxes, drinking age), and more general directives subject to specification by the states and/or counties or municipalities (e.g., where you have the right to bear arms). We also know that there are vast differences within the United States. Tennessee is poorer per person than Massachusetts, West Virginia has health statistics worse than some developing countries, and far worse than Connecticut or Washington state; the average Californian is richer than Louisiana residents, whereas Texas has more oil per person than most other states. Yet all these states share thousands of federal laws that need to be upheld. The European Union (EU) works in similar fashion. All that it is not specifically decided by the EU is decided by member countries, regions, and cities. Since EU member state have greater autonomy from the EU than do states in the United States, it is at times appropriate to compare individual European countries, or a small group of countries, to the United

The Global Engine

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States. The five most populous European states (Britain, Germany, France, Italy, and Spain) total roughly 292 million people. These are also modern, rich, and democratic states, and a thus a good comparison to the United States. Obviously Europe has more than these five, so most comparisons will be at the aggregate (European) level or be based on per capita (per person), XX per 1,000 (e.g., physicians per 1,000 citizens), proportionality, or direct laws. Finally, a brief clarification on parties and politics is in order. America never had a Socialist revolution, or significant Communist, Socialist, or Social Democratic parties, and so both main American parties have their roots in what is called classical liberalism, which emphasizes freedom, individual liberty, and capitalism. With the expansion of government, under the Democratic Party’s control during the 1930s Depression, we came to call those who favor bigger government and more spending liberals (as in spending liberally). This places American liberals on the political left, and they are mostly Democrats. In Europe and elsewhere, including Canada, Liberal parties are center-right. They emphasize Adam Smith’s classical view, but they are less socially conservative, recognizing that government has a significant role to play in providing certain social safety nets (pensions, education etc.). This places liberals closer to the ideological center than outright conservative parties.

An Unusual Personal Disclosure With the intention of contributing to Americans’ understanding of our most influential and important ally by addressing things ordinary people hear, discuss, and believe about Europe, this book does not seek to impose a particular view of Europe, nor a certain interpretation of whether European policies are better or worse than ours. I greatly admire the tradition of hard work and optimism that built our great nation, turning this melting pot of diversity (ranging from religious, racial, or ethnic to ideological and gastronomical diversity) into the most formidable nation-state in history. It is also this deep affection for what we have accomplished, and my belief in democratic principles of public debate, deliberation, and majority decisions—even when the latter counter my own convictions or ultimately end up hurting the majority supporting a policy—which led to this book. Rather than promoting certain opinions, my contribution to the public debate is to inform Americans, to briefly, and in plain language, clarify misunderstandings, rectify inaccuracies, and explain what Europeans are and

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do, so Americans can make better informed decisions about economics, foreign and trade policy issues, and the like. In the spirit of openness and accuracy, I find it appropriate to disclose my personal ideological stance. Unlike most researchers and scholars I have no firm conservative or liberal ideological beliefs, and I am not registered with a party. If forced I would identify as a libertarian, but one who places pragmatism above ideology, and always individuals and society above party. Internationally I find strength in different positions taken by Conservative, Labor, and Christian Democratic parties. Anecdotal evidence of my ideological neutrality, or pragmatism, may be that my students, as well as local residents commenting on my opinion pieces in the regional newspaper, place me all over the ideological map, branding me alternatively as a Marxist, a super conservative, an ultra liberal, and even a feminist. I leave it to the reader to decide whether any of these epithets apply. Let me finally acknowledge the skepticism you may harbor at this point. Challenging ingrained beliefs is a herculean task, I have no illusions to the contrary. People are creatures of habit, and because change implies that current beliefs are in some way wrong, and includes a level of uncertainty (and uncertainty is scary), humans are inherently reluctant to embrace change. Americans are no different. However, we also value dialogue and debate as the means of challenging and changing beliefs and policies. It is my yearning for a prosperous American future, convinced that informed citizens make better decisions, which drives me to engage fellow citizens in a debate on the realities of our most important ally, and the most enduring bilateral relationship the world has ever seen, the transatlantic relationship.

Outline The next chapter explains myths, misperceptions, and then why it is important to dispel these about Europe. The first main reason centers on the centrality of Europe to the United States culturally, economically, and politically. Americans have stronger historical and cultural ties to Europe than any other region; a heritage visible throughout American society. Although many countries and regions are important (China, Russia, and the Middle East), Europe, and European policies, affect millions of Americans every day through jobs, imports, exports, political decisions, financial investments, and decision making in international organizations where the United States and Europe dominate agendas.

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The second part focuses on the role of an informed citizenry for the functioning of a democracy. As the twenty-first century matures, Americans are struggling to understand the shifting balance internationally. Although the United States remains strong, American power is declining in relative terms vis-à-vis Europe, China, Brazil, and others whose capabilities now enable them to influence, even shape, America and American lives in ways only America has been able to do onto others since World War II. For the first time in three generations, Americans must adapt to what is called multipolarity: several different countries having significant power internationally. Americans are slowly coming to grips with the fact that as strong as their country is, purely domestic solutions are not always possible, and going it alone internationally is a rapidly diminishing option. As uncertainties abound (from terrorism to pensions; climate change to banking or health care), public debate and an informed citizenry have arguably never been more important. Chapter 3 defines Europe and introduces the EU, this “Europe of States.” Chapters 4 through 7 span economic, social, and cultural policies and characteristics of Europe, from competition and income tax to broadband access, work ethic, and European contributions to global development, security, and intelligence. Drawing on public facts and data, scholarly research findings, and personal experience to counter falsities and myths, the material is presented in a concise, easy-to-read, fashion. Since there must be an audience for myths, misperceptions, and distortions to be accepted and flourish, it makes sense to use the source of much public attention, including pundits, authors, newsmakers, and talk shows with large followers. However, I also use surveys, numerous interviews with ordinary people of all ages, and even reader comments on articles I have written for local newspapers, as anecdotal evidence of prevalent myths and misperceptions. A survey of American college students’ beliefs about Europe and Europeans was carried out for this book project and will be referenced throughout the text as “College Survey 2009.”2 The survey results are also available in appendix B. Again, no statistical knowledge is required, only curiosity. This book is aimed at anyone seeking a better understanding of what Europe is, what it is not, and why it will continue to influence America, and the rest of the world, for the foreseeable future. The concluding chapter offers some reflective commentary placed in the larger context of current American debates on issues such as trade, health care, environment, climate change, education, social security, the fight against terrorism, and promoting democracy. We live in a increasingly globalized, interconnected and high-tech world. If understanding properly what other people of similar economic and social standards have

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tried or are doing, the quality of our public discourse can improve, and with that public policy. I now invite you to join me in going beyond screaming headlines and flawed analogies, to unearth truths about modern day Europe and the Europeans. If I open eyes and provoke thoughts, let me know. I welcome your feedback at [email protected].

Chapter 2 Misperceptions, Myths, and Justifications Explained

This chapter places the discussion of America’s perceptions of Europe in its proper context. Notwithstanding plenty of talent and entrepreneurship, 24-hour news, the Internet, and a proliferation of related sources of information, Americans’ knowledge of global affairs remains— unfortunately—very limited. A Pew Research Center national study in 2007 “suggest little change in overall levels of public knowledge” compared with 1989.1 The results of my 2009 College Survey were similar to those in the Pew study. There was no difference between college students who read a daily newspaper or Internet news in regard to whether they also thought Europe was predominantly Socialist (approximately 18 percent). There are several potential explanations for this. Some students read or listen to conservative news, while others turn to liberal news (even if some students probably fail to recognize the ideological slant on the news), and these groups cancel each other out in terms of how Europe is portrayed. Some students may not be able to link certain policies, for example a story of German government protection of workers, to more Socialist policies. Perhaps most American students simply read headline news addressing American politics. Whatever the reason, this is bad news. In our interdependent world, the rise of new political and economic powers, droughts in India, US troop deployments in Afghanistan, or European regulations on bathroom cleaners, are issues that affect the security and income of a teacher in Seattle, a student in Baltimore, or a chemical engineer in New York. This lack of awareness is even more surprising when one considers that most issues today are what scholars call “intermestic”: they overlap domestic and international

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affairs. Pollution and trade are perhaps obvious examples, yet people often fail to recognize how most products, whether manufactured goods, services, or jobs, are today marketed, sold and bought globally, location is often of little concern. For example, a good 2007 US wheat harvest failed to prevent higher bread prices as draughts in Australia and export taxes in Ukraine caused global wheat prices to skyrocket in 2008. Being the sole democratic superpower since World War II contributes a partial but reasonable explanation for this lack of knowledge. The rest of the world has traditionally come to the United States—every religion, language, race, and ethnicity is represented within its borders—leaving many Americans without a perceived need to learn about other regions and policies, at least not the way the rest of the world studies and follows American culture and politics. While understandable, Americans’ limited knowledge of world affairs is neither justifiable nor defensible, and it carries implications for US domestic and foreign policies. Global economic and political integration—with the relative rise in Europe’s, and increasingly China’s, influence—makes it critically important to avoid misunderstanding of what other countries do, why certain actions are taken, and how these influence Americans’ lives. We return to all of this after briefly explaining how incorrect information becomes prevalent and accepted.

What Are Misperceptions, Myths, and Distortions? Perception is received and interpreted imagery. Misperception refers to when, for a number of different reasons, information received about the behavior of others diverges from reality; when a message is not interpreted as intended by, for example, a government, company, or individual. Mostly this is due to selective perception. Humans prefer consistency and simplicity over the complex reality called life; often erect filters that stop inconstant and contradictory information, leading people to hear what they like and expect. In other words, information is either incorrectly interpreted or altered so as to conform to what one expects based on preconceived notions and worldviews (e.g., when leisure is valued as highly as work and the observer perceives this as laziness). Academic studies show this phenomenon occurring when individuals, ostensibly learning from history, draw incorrect inferences from previous events that they believe resemble contemporary developments.2 There is a growing problem of filtered acceptance of information, where an increasing number of people choose to get their news only from certain sources that confirm their own preexisting

Misperceptions, Myths, Justifications

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political perspectives,3 for example, from Keith Olberman and Bill Maher on the political left, or Rush Limbaugh and Glenn Beck on the right (and there are many other similar voices). Receptivity only to information that conforms to one’s expectations increases the likelihood of accepting and disseminating distortions of reality, such as stories with omitted or misrepresented facts, to other audiences, either through the media or interpersonal communication (word of mouth). Lingering misperceptions and distortions can become permanently incorrect interpretations of events or policies, resulting in myths. A myth is a popular belief or story associated with a person, institution, or occurrence; it is established, formulated, and repeated over time, and when heard evokes a certain response or association.4 At its core, it has some element of truth, even if, when presented, it is largely divorced from reality. It can be used as a primitive and incomplete explanation that is widely believed and which acts to trigger support or opposition, and to justify certain action.5 Examples abound. In 1965, Hans J. Morgenthau, describing how a myth can simplify and distort reality while guiding leaders and historians alike, argued “The Government fashions an imaginary world that pleases it, and then comes to believe in the reality of that world and acts as though it were real” not unlike many radio and TV commentators today.6 Heuser and Buffet (1998) describe how myths “catalyze consensus where . . . persuasion through rational argument may not produce the same result . . . forestall logical questioning of the supposed historical parallel . . . bring emotions and moral appeal into play . . . cast the speaker or writer in the role of the sage.”7 In The Myth of Continents, Mart Lewis and Kari Wigen discuss how myths in geopolitics, most often based on eurocentric perspectives, have led to distorted worldviews and maps.8 The Russian philosopher Ghia Nodia dispels the myth that nationalism is inherently and solely destructive by showing how nationalism’s unifying force is necessary for democracy.9 What unites them all is the recognition of peoples’ inherent desires to simplify, and our difficulty accepting dissenting information. Take for example the myth that in America, self-identified liberals donate more to charity than self-identified conservatives. Extensive verbal support from liberal democrats for government largesse, extensive social welfare programs, and foreign aid, have made most people believe they also give more to charity, while rich conservatives horde money without caring about social progress and poverty. This is debunked by Arthur Brooks in Who Really Cares: The Surprising Truth about Compassionate Conservatism (2007). As Brooks shows, in every income group, and controlling for age and race, those who identify as religious and conservative give a higher percentage of their income to charity than do those who identify as liberal and nonreligious. In addition to making headlines across numerous news outlets, his findings

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contribute to a more substantive debate on the role of government versus the private sector in alleviating poverty and homelessness. Americans’ beliefs and views increasingly stem from ideologically driven radio and TV talk shows, newspaper headlines, or online blogs (see appendix).10 Many of these shows distort, alter, or omit facts for the purpose of promoting an ideology and political agenda, or specific project. Add to this mixture the dismal, and diminishing, attention of citizens to international news (down 25 percent from 2002), and it is easy to see how misperceptions and myths substitute for reality. So for example, take the myth that Americas would never accept government run health care as it leads to bureaucrats dictating and rationing care. Well, the one-third of Americans who receive health care through Medicare, Medicaid, federal employee programs, or veterans’ facilities, already experience government run health care; and every private insurance company rations care in some form. The myths about European care (where most doctors and hospitals are private) are addressed in chapter 6. How about the myth of business friendly, entrepreneur driven America? Realty: higher corporate tax rates than all other developed countries, and fewer small businesses than in half of European countries. The belief in these and similar myths drives behavior and also prevents honest debate. My intention is not to carp about popular hosts such as Mr.’s Dobbs, Schultz, Hannity, Maher, or Limbaugh. In a free society it is, and must remain, an unquestionable and inviolable right for anyone to espouse their views and argue opinions, . But this does not obligate one to accept everything that is said. A someone concerned with our nation’s well-being, and devoted to providing people with accurate information so they to make their own decisions, I feel obligated to counter widely held distortions, misperceptions, and myths. This includes comments by ordinary citizens, whom, after one or two unexpected surprises while vacationing or studying in Europe extrapolate to all Europeans; anecdotes quickly pass for substantive knowledge. A rude waitress in Paris reflects snotty Europeans, the prevalence of windmills and recycling bins make Europeans environmental nuts, and a strike in Athens shows how Europeans just want benefits and do not want to work. I have heard these and other similar comments from relatives, students, friends, TV commentators, and online bloggers, but as we shall see, all these are gross misrepresentations and distortions.

Justifying What Is to Be Discussed At this point I want to explain why it is important to take on ingrained myths (e.g., European states are Socialist), commonly held misperceptions


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(e.g., no one chooses their doctor in a universal health care system), and widespread distortions (e.g., Europeans are taxed through the roof). The justification has two main components. The first is the centrality of Europe to the United States. Culturally, economically, and politically, Americans have stronger historical and cultural ties to Europe than any other region.11 This part also places the transatlantic relationship in the context of the 2008–2009 economic crisis, highlighting how mutual economic woes increased Europe’s importance to the United States. The second part of my justification focuses on the benefits of an educated public. Democracy is premised on citizen consent, and a vibrant and prosperous democracy requires an informed citizenry. As I tell my students: having several options is good, but, without accurate information, you are less likely to choose the option that is best for you in the immediate and long term.

The Importance of Europe to Americans America’s founding fathers largely based their understanding of governance on European philosophers’ writings on freedom, governance, and property, while the British monarch served as the quintessential model of what to avoid when erecting governing institutions “of and for the people.” While nineteenth century European emigration (especially Irish, Swedish, and Italian) landed millions on the shores of New York, the United States largely refrained from direct involvement in European affairs until World War I, after which it again retreated. After dismantling much of its military arsenal, and agreeing with the French on a pact declaring illegal the threat or use of force against any nation-state (the Kellogg-Briand Pact), America again came to Europe’s rescue in defeating Nazi Germany and Italy. The transatlantic bond grew stronger through common opposition to the totalitarian Soviet Union, the erection of international organizations aimed at peace and stability, and the promotion of economic liberalization and democracy globally. At the end of the cold war (1989), the United States deemed it politically imperative to remain in Europe. Maintaining military bases was seen as a surefire way of claiming legitimate regional interest; of ensuring that European leaders remained alert on issues of interest to the United States. In this respect it helps having a close confident to relay information. America’s ears and eyes inside European decision making has traditionally been Britain, which economically, ideologically, and militarily, straddles the Atlantic, serving as a transatlantic connector. World War II was

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the gestation period for a bond that subsequently grew into a “special relationship.” From President Kennedy and Prime Minister Macmillan’s good personal rapport to President Reagan and Prime Minister Thatcher’s mutual ideological and personal affinity; to President Clinton and Prime Minister Blair’s “buddy-like” relationship, resembling that of two lost brothers, reuniting and learning from each other, personal relations between the two nations’ leaders has been a particularly important factor. The extraordinary relationship, as Clinton called it when addressing the British Parliament in 1995, showed no sign of abating in 2009, under President Obama and Prime Minister Brown (the conservative opposition in Britain is even more favorably inclined toward the United States). The American public also considers the British their favorite Europeans, with annual increases in bilateral air travel, immigration, and economic investments; British TV shows, music, and news also remain highly popular in the United States. Perhaps surprising to some, the United States has actually never fought France. After supplying troops and emptying their coffers to support our fight for independence, they have remained an ally through all subsequent wars except for the 2003 invasion of Iraq (see chapter 7). Recognizing that shared values and ideals of liberty and freedom were threatened, France invoked the common defense clause of the North Atlantic Treaty Organization (NATO) for the first time ever on September 12, 2001, declaring the preceding day’s attack on the United States an attack on the entire alliance. “We are all American now” headlined Le Monde (a major French newspaper), and Europeans north and south, east and west, lined up in support. Notwithstanding political rhetoric and cheap shots in 2003–2004, American corporations have flourished in France, and more ex-patriots live in the country of Dannon yogurt and Champagne than anywhere else bar England. Likewise, the French people retain a strong admiration of the American can-do spirit and endless optimism. Nearly every other European country also has large national expat communities in the United States— initiated during huge mid- and late nineteenth-century emigration—but they also trade with, and invest heavily in, the United States (see chapter 4). America and Europe dominate the agendas of all major international organizations (the United Nations, World Trade Organization, World Bank etc.), created after World War II; and they will continue doing so for decades to come. France, Britain, and the United States possess veto rights on the United Nations Security Council (along with China and Russia), and despite years of debate and criticism from other countries, any significant change to this power constellation remains highly unlikely. The World Bank organization, which provides loans to developing countries,


15

may see modest reforms, as might the International Monetary Fund (which advises countries in economic trouble and provides conditional loans), but any extension of voting rights or other influence to countries outside the transatlantic block will make only a tiny dent in the transatlantic dominance. The transatlantic share of global wealth may also decline slightly over the coming decades, but will remain dominant for at least the next two generations. There is transatlantic unity in pushing China to open its markets to Western products, and in preventing Iran from developing nuclear weapons. The Europeans are working alongside the Americans in Afghanistan and the Middle East; they have paid for 90 percent of reconstruction in the Balkans (Bosnia, Serbia, Kosovo) and are assuming peacekeeping duties in Africa and Asia. In certain geographical areas of strategic interest to the United States, the Europeans enjoy greater respect and influence, thus contributing to global security. Another major reason Americans should care about transatlantic relations concerns jobs and investments, discussed further in chapter 4. Approximately 12–14 million jobs in Europe and the United States are dependent on mutual trade and investments, and their value keeps rising.12 In 2007, transatlantic investments reached more than $ 2 trillion, roughly 100 times the size of their investments in China. Put differently, the sum exceeds the 2008 and 2009 US bank bailouts and stimulus packages, and the wars in Afghanistan and Iraq, combined. Europe’s $15 trillion economy has quietly surged to become the largest in the world, and transatlantic trade amounts to more than 40 percent of global totals, or the equivalent value of 40,000 luxury Mercedes daily. The European and American markets represent 60 percent of global aviation market, and a 2007 “Open Skies” agreement removed many restrictions on routes, prices, and flights across the Atlantic and within each continent; more competition, lower consumer prices and up to 80,000 new jobs resulted.13 Transatlantic trade rose by close to 50 percent between 2003 and 2008. Its value now exceeds the American defense budget or Walmart’s annual sales. Table 2.1

European Union, United States, and China Population, million

European Union United States China Source: CIA World Factbook, 2008.

496 301 1,250

% of Global Gross Domestic Product 29 25 7.8

16


Competitors in Waiting? Contrary to arguments of “cheap outsourcing,” global flows of technology and trade helped propel the West to its current living standards, where now fierce competition reigns supreme, and customer preferences dictate product development. Americans and Europeans enjoy access to cheap and more plentiful products at home, and more sales abroad, resulting in a higher standard of living.14 Naturally, people around the world want all the comforts we enjoy. China, Brazil, India, Russia, and other countries are entering a capitalist, global arena where instant communication, along with commercial, ecological, and cultural interconnectedness, eases the pathway to prosperity. In this context, globalization is both an enabler (technology and shipping) and a resultant (more competition and more consumer choices) of these countries’ increasing prominence. Although developing countries currently benefit from trading cheaply manufactured goods on the backs of workers earning rock-bottom wages, history assures us that this will not last. As living standards improve, competition increasingly centers on relative cost structure and tradability. Relative costs refers to all expenses, including wages, benefits, and taxes, but equally important, skill-levels and productivity, proximity to customers and their preferences, type of product or service, access to material, advertising costs, ratio of machines to employees, rule of law, and level of physical security, to mention but a few. Many jobs are tradable (transferrable to another location), and global competition is increasingly the norm in many professions (including teaching), but most jobs remain untradeable (e.g., surgeons, chefs, janitors, police, firefighters). Since high-skilled labor increases in demand as a country develops, this means that neither the United States nor Europe will forever be totally sheltered from competition by focusing solely on high-skilled, high-tech jobs. However, with enough investments in education and research, the transatlantic partners’ positions will remain dominant for generations. Germany has some of the highest wages in the world and is still the leading exporter by focusing on advanced technologies and quality. One major reason is the benefits of democracy. Freedom of thought promotes quality output and innovation, evident in that 80 percent of American and European engineers are globally employable compared to only 10 percent of Chinese.15 Notwithstanding impressive developments and export-led growth, the Chinese “miracle” is an inflated tale, with consistently unreliable figures floated by the state. A hierarchical authoritarian system, full of bribery, lacking transparency and the rule of law, provides individuals both incentives and ample opportunity to manipulate figures.16 The local party rep,


17

as well as the provincial, regional, and national department heads, all set growth rates such that, as one astute observer put it, “if the official says it is 7 percent so it is . . . we have no reliable data on consumption or housing.”17 Compare this to democratic systems where multiple and overlapping government agencies, independent think tanks, research institutes, the media, and the public, collect data, inquire, probe, and hold elected officials accountable, all while competing for resources. Underreporting improvements and profits would appear more beneficial to American and European government agencies and businesses since economic success carries the risk of higher taxes, reduced resource allocation or subsidies, and fewer tax deductions. Toss in the ideological diversity present in democracies, and the result is a system of “checks and balances” with greater accuracy and reliability. This means the transatlantic share of the global economic and technology pie is likely stronger than official figures indicate. Even as China and India make inroads on international trade, their political clout remains small and their trade policies raise concerns. Transatlantic interdependence and similar preferences result in a deep and mutual interest in ensuring that China and India open their markets to free competition, and adhere to trade rules. Europe and the United States have jointly launched numerous legal complaints, accusing the China of unfair export restrictions on raw materials and distorting competition,18 and several complaints linger about Indian restrictions on foreign investments. Other transatlantic concerns among policy makers and the public alike include Chinese currency manipulation (keeping it valued artificially low to promote exports), questionable production standards (toys and food scares in 2007 and 2008), human rights (censorship, arbitrary imprisonments and trials), and expanding military power (spending doubled from 2000 to 2008). Overall, while China’s growth fills headlines and toys and T-shirts made in China fill Western department stores, it is crucial to understand that China is growing relatively more important; it remains far behind Europe and the United States economically, politically, culturally, and yes, militarily, and it will remain so for several decades.

The Economic Crisis Increased Europe’s Relevance Although the recession began in the US subprime mortgage market, the financial innovations that enabled a bank to spread risks—bundling of loans, the fact that a guy in Paris could buy a piece of a mortgage on a

18


house in Seattle—became evident as house prices fell and the crisis rapidly spread into the “real economy” of jobs and savings. Rising unemployment, declining home values, diminishing pension schemes, and rapidly evaporating savings followed. By late 2008 the American, and global, economic outlook was dire. Recognition of the interdependence of the transatlantic economies, and the need for joint transatlantic efforts on international economic issues, were echoed routinely by policy wonks and decision makers in 2008–2009.19 Massive bank bailouts to jumpstart credit markets preceded drastically lower interest rates on both sides of the Atlantic, and both American and European governments launched stimulus packages intended to jumpstart lending, arrest the rate of bankruptcy filings, and cushion the effects of the recession by extending social assistance programs.20 In the otherwise expected debate on how much government should borrow and spend to stimulate the economy, and where such spending is most effective (e.g., infrastructure, tax breaks) two remarkable features stand out, and which are crucial to bear in mind as we continue. First, European policy makers were outspoken about fiscal discipline, reluctant to massively increase government expenses, and incur the resulting rise in national debts. While the American government experimented with taking ownership stakes in companies, and the Federal Reserve likewise engaged in debt-purchasing and massive lending, Europeans had more limited stimulus packages, and the European Central Bank assumed a more conservative stance, extending lines of credit rather than buying volatile and uncertain assets.21 Germany, traditionally frightened of anything potentially inflationary, such as loose monetary policy (allowing more money to flow by printing money or lending at extremely low rates), was most critical of large-scale government intervention. Prime Minister Merkel’s unprecedented attack on American and British “hyper-loose” monetary policies, and her fellow Christian Democratic economics minister’s unequivocal declaration that “Even in crisis we must maintain the balance between state and market,” rung loud across the Atlantic.22 Who would have ever thought that Europeans would be more concerned about borrowing and spending than the US president and the majority of the Congress? Second, before the crisis emerged the European economy had done roughly as well as the American for most of the preceding eight years, with stable economic and productivity growth. Furthermore, in 2008 and 2009, the American national debt grew at a faster pace than in all European countries except Britain and Ireland; 20 European countries retained lower debt-ratios than the United States by mid-2009. Savings prone and credit shy Europeans, accustomed to primarily private mortgage lending, few subprime mortgage opportunities, and 10–20 percent downpayments, appeared better suited to weather a credit-based crisis. But


19

even though Europeans had saved, used credit sparingly, and run profitable small businesses, loans and lines of credit for purchases, construction, research, and investment were severely restricted as banks became scared of incurring even greater loses, particularly in America, where real estate was plummeting in value. Both American and European banks suffered losses, yet Spanish, French, and Italian banks fared relatively well; with little exposure to subprime mortgages, Spanish bank Santander became one the world’s healthiest and wealthiest.23 American companies’ foreign investments also fell in traditional markets (Europe and China), and with lower consumer spending America-bound high-value European exports took a beating. To summarize, the global economy will be shaped largely by actions of the United States and Europe. Like spouses or business partners whom at times disagree, both sides may test, even annoy each other, while cognizant of the fact that life would be far worse without the other, especially since, in this case, the average citizen on both sides of the Atlantic is the main beneficiary of this relationship.

Why an Informed Citizenry Is So Important? Based on the extensive ties described earlier, one could be forgiven for thinking that as long as policy makers understand the nature and importance of a relationship—be it political, economic, or other—it matters little if the public is uninformed, or whether their perceptions are distorted. Yet that would be very dangerous. First, democracies entail officials being elected by, and beholden to, the public. America’s founding fathers understood that the Republic’s constitution, norms, values, and institutions (what we today colloquially call democracy) depend for its success on the quality of citizens. Their opinions matter; citizens vote at the ballot box, with their wallet, and with their voices. Contemporary politicians (on the political left and right) constantly accuse each other and the media of distortions and bias, while they all express their desire for better informed citizens. In fact, much research supports the words of Lamar Smith, Republican Congressman from Texas, “if the American people can’t get good information, can’t get the facts, and can’t make good decisions, then we simply don’t have a viable democracy.”24 Second, no relationship can be taken for granted; similar to marriage, a relationship must be nurtured and commitments constantly renewed. If Europe were better understood, the quality of public debate could rise above “Socialism versus capitalism” or “appeasers versus warriors,”

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the childishly simplistic myths and distortions perpetually espoused on radio, TV, the Internet or in print media. If you are one of the millions of Americans who are outraged when hearing about elected officials sneaking last-minute, tax-payer funded, amendments for new luxury jets or hometown pet projects into massive government spending bills, hoping no one discovers them until the bill is signed into law, then you should be equally concerned with ubiquitous myths, misperceptions, and distortions serving as the basis of public opinion and lobbying efforts for legislative initiatives that may well hurt the American worker. Yet, to get elected, most candidates and their supports (individuals and interest groups) prefer carefully targeted and overly simplistic 20–30 second soundbites. These then constitute the bases on which people elect candidates, or express support or opposition to policy proposals. In homes and schools, in the media and in the Congress, die-hard ideologues and online bloggers frequently substitute misleading clichés for serious debate; rejecting facts, while resorting to intellectually dishonest labeling and gross generalizations. For example, protectionism—limiting or taxing imported goods and services with the intention of saving jobs in certain sectors of the economy—has historically always failed, but memories are short when tempers flare.25 Congress included an attractive sounding “buy American” provision in its 2009 economic stimulus bill, requiring funds to be used only to purchase 100 percent American products and services as long as they were no more than 24 percent more expensive than foreign competitors. Numerous business representatives, recognizing the devastating effects that could follow, including retribution by foreign investors, retaliation against American exports, lay-offs of American workers, not to mention stifled competition (a decidedly un-American trait), stepped up counter efforts. Many of them issued reports and specific recommendations for how to liberalize (open) international markets further, ease business regulations, and spur job growth.26 Remember that American companies use parts or tools from across the globe in assembling machinery or conducting work, just like businesses in other countries use American parts in different machines or equipment; it is a beneficial situation. This interdependence, regarding everything from screwdrivers, to clothes, to cement and cars, makes it virtually impossible to verify that anything is 100 percent American. So, in 2009, cities across the country rejected federal money because suppliers and contractors were unable to guarantee they did not have foreign parts present in their products. Pennsylvania based Duferco Farrell was one company that, faced with retaliation from foreign buyers (rejection of parts and cancelled contracts), laid off 600 employees. Some lessons were learned. When a similar provision was proposed in the “cash for clunkers”


21

(cash for old cars when purchasing a more fuel efficient vehicle) program, it was removed after an outcry by American dealers and European officials. Nonetheless, the trade restrictive sentiments in the Congress (the House of Representatives, in particular) and the nation, worried exporters, as well as Canadian and European officials. It should also worry Americans. Issues such as these matter because, as discussed in chapter 7, European regulators can reject US business mergers and impose import taxes; they are rapidly setting global standards in areas ranging from accounting to telecommunication, to chemical regulations, meaning anyone wanting to play in the big leagues will have to familiarize themselves with, and often adapt to, their rules. European decisions thus have global implications, increasingly mimicking the way in which American policies have often influenced global developments. The general lack of knowledge about international affairs raises important questions about the formulation of foreign policy. Uninformed citizens become ill-informed leaders. A look at recent presidents and elected representatives reveals that most American policy makers reach top positions lacking any knowledge of foreign affairs, let allow experience.27 The circle is perpetuated as rising stars often receive incomplete or slanted information from peers and superiors. Therefore, a better informed citizenry also means better informed future leaders. Conversely, a general public lacking in understanding of foreign affairs provides the elite greater opportunity to manipulate public opinion and diminish transparency. Why? Cable TV, the Web, and cell phones make our lives more enjoyable, allowing people to gather information and research almost any issue. One could argue that there should be no excuse for saying “I don’t know” or “I don’t understand,” but in reality such responses are understandable and, frankly, logical. The explosion of information emanating from our high-tech devises also makes it increasingly difficult to distinguish fact from fiction. Awash with iconography and rife with contradictions, debates among pundits and Monday-morning political-quarterback citizencommentators result in a frightening display of conspiracies, half-truths, emotional outbursts, and selective phraseology; all frequently substituting for proper research and analysis. The work of experts give way to a hodgepodge of extracts that distort reality and reinforces misperceptions and myths, severely complicating the task of overcoming public cognitive dissonance (truth confronting one’s preexisting beliefs). Loud and aggressive ideologues frequently prevail when competing for the public’s attention; in the process relegating accuracy and truthfulness to an afterthought. Returning to the specific question of why this matters in foreign affairs ponder the following. Polls regularly show 40–60 percent of Americans have favorable views of more cooperation with Europe, and a majority

22


wants more collaboration eradicating poverty, stemming climate change and immigration, and improving security.28 However, it is difficult to make out whether those favoring closer ties expect Europeans to simply walk to the beat of the American drum, serving as ornamental displays of international support from fellow liberal democracies, or, whether there are genuine expectations of a balanced relationship and cooperation. The confusion becomes evident when actual policy is discussed, or when action is called for, as the effects of misperceptions and myths discussed earlier set in, and severe skepticism, even opposition, again dominates. For example, in regard to health care, many say we cannot learn anything since the European systems are Socialist; and do not mention foreign policy, where weak and pacifist Europeans run from danger. As we shall see in subsequent chapters, these are wrong; which means Americans are clinging to incorrect beliefs about the very people they prefer to have closer ties with, and with whom they perceive global problems can best be solved. There are also benefits of accurate information for the individual investor. The majority of Americans own stock, most transnational companies are American and European. The individual business person benefits both from their own knowledge and from an informed public that rejects policies detrimental to small business, important since most small business exports go to Europe. Finally, the leisure traveler can also avoid embarrassing, sometimes costly, misunderstandings at our favorite European vacation destination. So what can be done? It is appropriate to retain a degree of deference to those we elect, but remember that voting alone does not absolve us of our responsibilities to acquire accurate information. Some research indicates that the American public reacts reasonably well to informed foreign policy debate.29 A good start is an accurate, informative, and civil exchange to improve public knowledge, because, as two scholars note, “in general, a more informed citizenry increases the likelihood that elected officials will be held accountable for their actions.”30 The same can apply to challenging populist talk show hosts. I am certainly not saying that a lack of understanding of European life and policies will undo America, but, it is probably no exaggeration to say that many Americans know more about their favorite football team—whose fortunes hardly affect their jobs, security, or personal finances—than they do about what or where we export, who invests and creates jobs in the United States, and Europe’s importance. Even if the American people reject adopting or learning from European policies, if they are seen as too liberal, too Socialist, or too pacifist, we can at least agree that an accurate understanding of the strengths and weaknesses of Europe, and European policies, can only improve the quality of domestic


23

public debate, enable better consumer choices, and increase the prospects of fruitful American foreign, economic, and security policies.

Suggested Videos, Readings, and Web sites 1. European Union, EU in the US—A long standing partnership, EUtube, video, posted June 15, 2007, http://www.youtube.com/watch?v=8k7Obmsa8_E. 2. Cyril Buffet and Beatrice Heuser, Haunted by History Myths in International Relations (Oxford, New York: Berghahn Books, 1998). 3. Kati Suominen, “A New Age of Protectionism? The Economic Crisis and Transatlantic Trade Policy” Brussels Forum Paper Series March (Brussels: The German Marshall Fund of the United States, 2009), http://www.gmfus.org/ brusselsforum/2009/docs/BF_Kati_Suominen_Final.pdf. 4. John L. Harper, American Visions of Europe: Franklin. D. Roosevelt, George F. Kennan, Dean. G. Acheson (Cambridge: Cambridge University Press, 1996).


Chapter 3 Simplifying the Confusing: The “Short-Short” of Europe and the European Union

The Europe of the early twenty-first century is one of unprecedented peace and prosperity, of economic might and technological prowess, but also, as elsewhere, lingering social and economic problems. All of this is laid out in the following five chapters. In this chapter, I briefly focus on the geographical scope of Europe and explain what this union of states really is and what it does. For the purpose of our discussion, Europe refers to the 27 countries that make up the world’s largest economic free-trade area, the European Union (EU), plus Norway and Switzerland, 2 wealthy, solidly democratic countries, firmly anchored in European traditions. The EU is a gigantic economic, social, and political integration project extending across the European territory (cf. map 3.1). Norway and Switzerland, while not formal members, are tied to the union through numerous agreements (treaties); they apply the vast majority of EU laws and have harmonized much domestic legislation to be congruent with EU law. In addition, both countries contribute vast sums every year to the EU budget in return for access to the free trade-area (selling and buying goods without taxes) and participation in most other policy areas. This is similar to Puerto Ricans, who pay social- and payroll taxes in return for full access to the United States but lack representation in the Congress; the Swiss and Norwegians lack formal influence on decision making in the EU. The east European countries’ borders now serve as the outer limits of Europe. Thus we exclude Russia, Ukraine, Belarus, Georgia, Turkey, and the

Acores (P)

Island Madeira (P) Canarias (E)

Suomi Finland

Martinique (F)

Norge

Suriname

Eesti

Sverige

Nederland

Non-Members

Ceská republika

Monaco

Applicant countries

Moldova

Osterreich Magyarország Slovenija Romånia Hrvatska San Marino

Italia

Bosna Hercegovina Srbija Kosovo

Crna Cara

Citta del Vaticana

U g

Suisse Schweiz Svizzera

Ukraïna Slovensko

Liechtonstein

France

España

Member countries

Belarus’

Polska Deutschland

Luxembourg

Portugal

Rossija

Lietuva R.

United Kingdom

Andorra

Reunion (F)

Latvija

Danmark

Belgie Belgique

Guyane (F) Brazil

b ra

d

Ireland Eire

Guadeloupe (F)

N

Sakartvelo Azezbaycan Haiastan

R

Bulgaria

P.J.R.M.

Shqiperia Eλλαδα Ellada

Malta

Map 3.1 Map of the European Union

Türkiye KUTTpos Kypros Kibris

Simplifying the Confusing

27

Balkans. The latter are unequivocally in Europe, yet they are not, and will not be for a very long time, members of the EU. They have developed well since the early 1990s, but EU laws and regulations, which shape much of European society (and many of the issues discussed in later chapters) do not apply.

What Exactly Is This European Union That Today Represents Europe? Unsurprisingly, but understandably, few Americans grasp the nature of the EU, leading many to dismiss it as less important than its member states. The EU is the world’s most extensive experiment in pooling national resources, and, in many ways, the embodiment of modern Europe. A nuts-and-bolts introduction of the EU is required not only to aid the reader in understanding why certain policies exist in Europe, for example, when addressing misperceptions about health care or business, but also because, as we see in chapter 7, the EU’s tentacles reach across the globe, affecting in some fashion nearly every area imaginable. Think of this: one could not explain California state policies and politics without explaining and referencing US federal institutions and laws; the same is increasingly true for Europe. In European studies circles, especially those of us teaching European society and politics, it is largely a truism that no one in their right mind could create a governing structure as ridiculously complex as the EU’s. An array of overlapping and mutually controlling institutions between the European level and the national level leaves the EU resembling a steroid-induced version of the American federal system of checks-and-balances (both hierarchically and vertically). EU’s solidly democratic basis notwithstanding, numerous limitations and exceptions to every rule make explaining in detail how the EU works as complicated as detailing the rules of the US House of Representatives, or as boring as reading the telephone book out loud on a rainy day. Therefore the discussion here focuses on general provisions, with numerous examples, comparisons to the US system, and some illustrations of Europeans’ views of the EU. (There is more information available through suggested Web sites and readings at the end of this chapter.) After World War II, the continental home of brilliant philosophers and warmongers alike, turned decisively peaceful and westward. In 1952, led by French Foreign Minister Schuman, six countries agreed to take the first incipient steps on the path to an integrated Europe. Fearing a resurgent Germany, but having learned from experience the devastating results of penalizing and isolating Germany after World War I, the intention now was to help rebuild a democratic Germany by inviting them into

28


the international and regional community, but under strict supervision. France, Belgium, Luxembourg, and the Netherlands invited Germany and Italy to join them in a Coal and Steel Community where all production and sale would be placed under a High Authority (headed by French businessman Monnet) and no taxes would apply in cross-border trade. Its success led up to the 1957 Treaty of the European Economic Community, the foundation for today’s union. The goals of this new body were not unlike those put forth by President Franklin Delaware Roosevelt in his 1941 congressional address on the possibility of a world guaranteeing the freedom of speech and of worship, of freedom from want and fear. He spoke of a world free of tyranny or wars against neighbors, of “cooperation of free countries, working together in a friendly, civilized society.”1 The European treaty’s reference to “an ever closer union” conveyed a desire to overcome past animosities, prevent future conflicts, and to cherish unity built on four freedoms: the free movement of persons, services, goods, and capital. They remain at the core of the contemporary EU. Tony Blair, former British prime minister, and strong ally of presidents Clinton and Bush, is ideologically centrist, and also one of Europe’s strongest advocates (I tell my students that irrespective of your personal political leanings, listening to Mr. Blair is experiencing public oratory at its very best. Check out his 2001 speech to the Labor Party Convention or his 2005 delivery at the European Parliament). In 2005, he summarized excellently the core ideas of the current union ideals survive through change . . . They die through inertia in the face of challenge. [The current debate] . . . is not . . . between a “free market” Europe and a social Europe . . . This is a union of values, of solidarity between nations and people, of not just a common market in which we trade but a common political space in which we live as citizens . . . The purpose of political Europe should be to promote the democratic and effective institutions to develop policy in these two spheres [economic and political] and across the board where we want and need to cooperate in our mutual interest.2

Thus, the union is not intended to erase regional cultural differences, but to integrate areas of common values (peace, freedom, and prosperity), while allowing different regions freedom to express and market themselves (think California versus Michigan in attracting investments or tourists). The EU is not to homogenize Europe’s linguistic diversity, but to cherish and utilize people’s multilingual skills (most are fluent in three languages); not to stifle competition or individual talent, but to promote social equality and economic prosperity; not to diminish British, French, or German stature on the world scene, but to strengthen all countries’ clout through membership in the world’s largest economic power.3


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An A, B, C on the Workings of the European Union To begin with, Brussels, the capitol of Europe, resembles a smaller Washington DC. Policy makers, national and regional representatives, lobbyists, not-for-profit representatives, and scholars from all across the globe compose the tens of thousands of business-attired professionals who swarm hundreds of massive buildings at day, and restaurants at night, all attempting to influence in some way the evolution of an ever expanding and increasingly powerful EU bureaucracy. Just as in Washington DC or New York, hundreds of languages are spoken throughout the city, but EU working languages are English, German, and often French (though all legal documents are translated into each of the 22 official EU member languages). The Consolidated Treaties of the EU (there have been four additional treaties since 1957, the latest entered into force December 1, 2009) serve as the legal basis for all EU action.4 The council consists of the member states’ cabinet ministers (the equivalent of secretaries in the US context), and it is the main decision-making body on new laws in the EU. Foreign ministers, labor ministers, and so on, regularly meet with their colleagues form all countries to decide on a range of issues within their areas of responsibility. Though most issues require only a “qualified majority” (representing roughly two-thirds of countries and populations), the ministers prefer, and therefore seek, consensus whenever possible. All new EU agreements or laws of any sort require approval of the ministers in their respective councils. Any irresolvable problems are passed on to the ultimate decision makers, the heads of government (prime ministers, or in the case of France, the president) who meet four times annually as the European Council. Defense, taxes, and much social policy remain with the national governments. No EU official can tell Poland where to send troops or dictate income tax for a wine producer in Spain (unlike the taxing powers of the US Congress). However, there is a directly elected parliament that shares legislative powers with the council on the EU budget and three quarters of all laws; an estimated 80 percent of new laws in Europe emanate from the EU and apply across the continent, making the parliament’s powers important. Much like their American congressional counterparts, EU parliamentary candidates run in a first-around-the pole system, representing districts across the EU. Member states are allocated parliamentary seats based on population, and the districts within countries are in turn based on population. How about this?: Since any EU citizen can live and work

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in any member state, a Greek citizen can reside in and represent an eastern Estonian district, just as a Pennsylvanian can take up residence in New York and run for office.5 Furthermore, in a clear sign of European integration, parliamentarians vote along party lines rather than nationality. So for example, Conservatives from Finland vote with their Spanish and Slovenian counterparts. The common budget provides support for, among other things, infrastructure and economic development, agriculture, trade promotion, academic research, education, and foreign aid. Farm subsidies, one of the original reasons for a common budget, remains the largest single expense, but for political rather than practical reasons (just as in America). As the world’s largest agricultural exporter, large, high-tech European farms produce more food than can be consumed, whereas inefficient small- and medium-size farms stay afloat through tax-funded EU subsidies.6 Most Europeans, just like Americans, argue cultural and social reasons for subsidizing agriculture; after all, how else can you explain why parties on both sides of the Atlantic overwhelmingly and continuously vote to allocate more than $20 million per day to farm assistance? The commission is the executive branch and guardian of EU treaties (a mix of American congressional and presidential powers). The commission is subjected to hearings in parliament before being approved (the way the US Senate questions cabinet nominees). Led by a president, the commission formally proposes all new EU legislation, oversees its implementation and adherence by member states, and can fine member states for breaches of EU law. The commission can issue direct regulation or directives (decisions where states implement laws in ways they deem appropriate) in all areas related to competition policy or trade, similar to the US federal government’s power to regulate everything related to commerce. The commission take a member state to court. There is a European Court of Justice (ECJ) that rules on EU law; as with federal US federal law, no national European law may contradict EU law. The commission is also recognized as a legal entity in its own right and represents the EU in international trade negotiations (e.g., with the US trade representative), thus making it very influential in all areas of EU competence (see chapter 7) . EU law now prevails throughout the continent. In practice, this means there is only one large European market, without internal borders, and common external borders. All trade agreements are European rather than national, meaning any American products destined for Europe enters one big market place (defense material are exempt), similar to imports entering the United States. This explains how Dell, operating in Limerick, Ireland, enjoys the same right to sell its products in Portugal or Latvia, just as BMWs rolling off assembly lines in South Carolina are sold in New York state.

Simplifying the Confusing Table 3.1

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Division of responsibility in the European Union

Issue areas

Trade, commerce, monetary policies

Police, asylum, immigration

Foreign policy, defense, income tax, finance, welfare, education

Who has ultimate decision-making power

EU level (Commission, Central Bank, Council)

Mixed: cooperation or shared powers

Nation states

The launch of the euro currency in 1999 is perhaps the prime empirical example of European economic integration. Currently used by 17 countries (2009), it must eventually be used by all states except Britain and Denmark (they negotiated exceptions in 1991). The European Central Bank (ECB) works similarly to our Federal Reserve and has total independence to set Eurozone interest rates, extend credits to banks, buy bonds, and sell gold. Its international influence on trade and currency flows means there is regular and close consultation with the US Federal Reserve. Table 3.1 provides a rough division of where power lies in the EU. Note, even in areas that remain with the member states, the EU is involved in setting laws and guiding policy. For example, wages and taxes are decided in member countries, but EU laws limit work hours, prohibit gender or national discrimination, and guarantee free labor movement. The EU remains a work in progress. In many ways Europe is undergoing a process similar to America’s in the late eighteenth century, that of integrating disparate but geographically proximate and socioeconomically similar states into a federal structure. Historically, two things have spurred integration: spillover and crises. Where common policy areas are agreed, for example, on free movement of goods or people, other related issues appear. Is Polish jam the same as Swedish jam, or British preserves? If Polish producers are to sell their products freely anywhere in Europe, then issues of content and definition need to be settled. There are EU emission standards for lawn mowers (by comparison, there are 20 plus different standards across the 50 US states) and common rules for public procurement (national and regional public services contracts). As people move and work anywhere in the EU, they will also get sick in other countries, their children need schooling, and taxes must be paid, thus promoting harmonization and integration in all these areas. Times of crisis have also tended to expose the shortcomings of national policies in the face of common problems or threats, thereby serving as the basis for intensified cooperation.

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Because an ever increasing number of issues affecting peoples’ daily lives are now being decided at the European level, many Europeans desire a say in how this federal European entity evolves. Debates and proposals occur across the continent, in cafes, classrooms, and boardrooms. Having a public debate on integration of sovereign countries (rather than states as in the United States), in an era of public education and mass communication, makes for a more difficult, yet also more informative, process. A majority of European citizens generally support the emergence of a strong and integrated Europe, with the highest support coming from the well educated and those understanding how the EU works.7 An historically more conscious and ideologically informed European citizenry—especially in northern Europe—also forces politicians to answer real policy questions rather than resort to populist election rhetoric. The question citizens normally ask whenever a threat or opportunity arises, “what is in the interest of my country?” is increasingly superseded by a generation of Europeans asking first “what is in the interest of Europe?” The Spanish are no less proud of their nation today than 20 years ago, nor have the Germans abandoned the confidence and pride that lay hidden under a cloak of guilt and remorse for decades following World War II, but Europeans grow up knowing only an open, cooperative, peaceful, prosperous, and fully accessible-for-anything-you-want-to-do Europe. Across the continent, especially those less than 30 years of age, realize that their own future depends on a strong and healthy Europe of economically and socially intertwined countries, creating a sum larger than its parts. This integration is augmenting distinctly national perspectives to create a truly European identity. One manifestation is EU citizenship awarded to every national of a member state. It complements national citizenship and carries a set of fundamental rights and obligations, such as the right not to be discriminated against on the basis of nationality, or the right to seek assistance from any member embassy if you are stuck abroad and your country lacks representation (an embassy or consulate). The invocation of “Europe” to encompass all countries in the region is common in the media, among experts, policy makers, and established academics. The widespread habit of generalizing about Europe has a natural basis: the human proclivity for simplicity. Continuous references to Europe as a whole appears to make sense in the same way we can reference the United States with its 50 states, all enshrined with significant autonomy and different traditions, yet sharing most cultural, linguistic, and legal bases. A region where several seemingly comparable countries share similar cultural traits and languages (Sweden-Norway, Austria-Switzerland, PortugalSpain, Belgium-Netherlands), and coexist under shared external borders, and—for most—a common currency, lends itself to a generic rubric.


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However, the world’s most extensive attempt at regional integration, with its increasingly visible European identity, remains a union of nationstates. As noted earlier, the intention of European integration, and as we shall see, the actual process of integration, has not erased the different traditions and cultures of European peoples, any more than American federalism has made Texans identical to New Englanders. Portugal and Finland, Britain, and Poland may now belong to the same union of states, but economic, cultural, and social differences persist, even more so than between, for example, a Bostonian college professor and a Colorado rancher. Furthermore, just as America’s overall wealth and prosperity disguises huge internal differences (Mississippi and West Virginia has half the income average of Maryland and three time the poverty rates) so do aggregate EU values. Although the newest democracies in Eastern and central Europe lag their Western counterparts, all are far better off than any third world, poverty-stricken country, and some, such as Slovenia and the Czech Republic, have living standards largely indistinguishable from Italy or Spain. Thus, as we continue, distinct national differences will be discussed as appropriate, but, when applicable—and there are many issues where this applies—Europe as a whole will be referenced. Occasionally, I will use comparisons of European countries to American states to illuminate certain similarities and differences across the Atlantic.

Suggested Web sites and Readings 1. A nice and illustrative introduction to the EU. European Union, Europe at a glance, http://europa.eu/abc/index_en.htm. 2. A very good introductory text on the EU. John McCormick, Understanding the European Union: A Concise Introduction 3rd ed. (New York: Palgrave Macmillan, 2005). 3. Informative video on the EU’s impact on ordinary Europeans. European Union, Building a Citizen’s Europe, EUtube, video, posted October 30, 2007, http://www.youtube.com/watch?v=Wa-AOEs1gJI. 4. Easy to understand background on the EU, as well as colorful and illuminating information on all the main issue areas where EU is involved. European Union, “Europe in twelve lessons,” http://europa.eu/abc/12lessons/index_en.htm.


Chapter 4 Attractive, Determined, and Competitive: Socialism Has Ceased to Be

European States Are Socialist. Surprise, Capitalism Lives! Variations Europe is socialist, with high taxes, bloated welfare systems, herculean labor unions, and six weeks paid vacation; governments are inefficient and innovation stifled. Mediocre, socialist Europe . . . [it] is socialist and everyone falls through the cracks . . . When life becomes an extended picnic, with nothing of importance to do, ideas of greatness becomes an irritant. Such is the nature of the European syndrome.1

Background This myth stems partly from Europe’s historically larger government involvement in all areas of life. Even though twenty-first-century Europe bears little resemblance to the Europe often portrayed by contemporary American talk shows in their quest for higher ratings, few one-liners are more effective than presenting a new federal program or law as amounting

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to a “step closer to European Socialism,” which in most people’s minds equals Communism. Europe’s long and extensive experience with Communist and Socialist ideologies played a role in shaping current state structure, as well Americans’ perceptions of Europe. Yet classical freemarket Liberalism (or Capitalism as we know it) also originated in Europe and remains very strong today. European Communist parties were common, but they rejected Soviet-style totalitarianism, focusing instead on promoting an antibusiness, anticapitalist agenda, focused on economic and social equality. They attracted relatively few but very devote followers, and some parties occasionally served in coalition governments throughout Europe, where they had some success with their agenda in the development of the welfare systems. The roots of Social Democracy are found in a mix of Capitalism and Socialism originating in the late nineteenth-century writings of Eduard Bernstein. Bernstein rejected Marxism and supported freeing up trade and competition, while ensuring that workers also benefitted. These were the parties worn torn European populations entrusted with rebuilding their countries after World War II. Over the subsequent decades, continental and northern European welfare models, emphasizing social and economic equality, community interests, and a heavy state hand in industry, were implemented. This was not Socialism, which implies a government planned economy, as well as social, and educational sectors, limited and preselected (at best) options at the ballot box, and government controlled speech. The prevalence of Socialist, Labor, and Communist parties, and the development of extensive welfare state provisions, created an acceptance of a role for government in providing many of the provisions for which Americans looked to the private sector, but democratic principles remained steadfastly upheld. More than 30 years of expanding state powers (up to the 1980s) has been followed by an incremental shrinking of the welfare state as Communism ended with the fall of the Soviet Union, regional and global integration gained pace, and private enterprise was increasingly supported politically and financially. When central and Eastern Europe shed the yoke of totalitarianism, embarking instead on a journey of democratic transition using elements of both Social Democratic and more Anglo-Saxon, or American, style government policies. Since the early 1990s most communist parties across Europe have been succeeded by Left parties that have adopted some of the old Social Democratic and Labor parties’ state-focused agendas, while the Social Democrats and Laborites have moved into the political center, embracing globalization, competition, and private enterprise.

Attractive, Determined, and Competitive

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Europe Today Many European states are among the most business friendly and technologically savvy economies in the world, supported by constitutional guarantees of freedom of speech and a free press. All Europeans enjoy competitive and fair national elections, with regular, peaceful, transparent, and orderly changes in government. Economic reforms have been significant throughout Europe, and nowhere, including the former Communist countries in Eastern Europe, is the structure similar to the planned economies of the former Soviet Union or contemporary China. French Finance Minister Christine Lagarde commented, in flawless English on America television, on why French banks and the French economy were doing better than America’s by late 2009. Summarizing the last decade’s reformist mindset, she said “the whole world is turning a little French. We support capitalism and the free market, but there must be rules . . . stop signs, safeguards, gatekeepers . . . so there is no zoo . . . we want competition, to allow everyone to flourish.”2 Such focus on fairness and competition is emblematic of European parties generally, and, most particularly European Conservatives, Christian Democrats, Liberals, and even many Social Democrats. In 2008–2009 European parties on the political right gained popularity, winning several elections, while retaining support where they were already governing, in their own majority or as part of a coalition (Austria, Denmark, Estonia, Italy, France, Germany, Poland, Sweden, Latvia, Switzerland, and the Netherlands).3 The June 2009 European parliamentary elections also saw significant gains for right wing, freemarket parties (but also extremist parties, see chapter 6). Liberals also did well. Unlike in America, where liberals are left-of-center politically (mostly Democrats), Liberal parties elsewhere mix right-of-center, fiscal Conservatism (as one would find in a moderate American Republican), with extensive acceptance of individual lifestyles (as one would expect from a left-wing Democrat). The French Conservative government was facing only a feeble challenge from a Socialist opposition so weak that many members were leaving, while others discussed how to potentially dismantle the party. The German Christian Democrats, as well as the Free Democrats (a pro-business, free-capital party), formed a coalition government after winning fall 2009 general election, while in Britain the Labor Party remained in total disarray, lagging the Conservative Party (Tories) in opinion polls heading into 2010 elections; with the same pattern evident in Spain.

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Across Europe, parties on the left have embraced labor market reforms, incentives for work, private sector competition, and lower business taxes. The Labor Party in Britain removed its goals of a nationalized economy—something it never actually seriously pursued—in the mid1990s, joining the conservatives in embracing financial deregulation and free trade. Extensive social programs and support mechanisms certainly remain, and the state still accounts for 35–50 percent of spending in all European countries, versus 32 percent and rising in the United States. But reforms have been ubiquitous and far-reaching, with extensive private sector involvement, and the abolishment of cradle-to-grave security (see chapter 6). For example, while the French school curricula remains centralized, Finland, Sweden, Germany, and Czech Republic all have rigorous high school and tertiary (university) systems, which allow flexibility in course selection and high-quality graduates. Private physicians and hospitals in Germany and France provide universal health care coverage and compete on quality in serving citizens. Legal guarantees of religious freedom are firmly entrenched in all of Europe, and in some countries social services are provided through Christian organizations. Southern and Eastern Europeans rely on nongovernment organizations, churches, and family, rather than government, for most of their social and financial support. The Czech Republic, Hungary, Poland, and the star of them all, Slovenia, have won international praise for their economic development and democratization. Changes in the regulatory environment across Europe since the mid-1990s, mostly focused on competition, have been conducive to economic prosperity. Job security has been replaced with “protection of people” focused on flexible job markets.4 The private sector accounts for 90 percent of industrial output, and during the 2008–2009 recession most countries chose to cut business taxes, urge fiscal prudence, and extend lines of credit to business. In short, none of the above changes would apply in Socialist systems.

Some Real Examples The country often touted as the most centralized, or most Socialist, in many people’s eyes, was the subject of a two-part presentation on Comedy Central’s The Daily Show April 21 and 22, 2009. While admittedly hilarious, it depicted Sweden as accurately as the Bundy family—in the incredibly popular 1980s sitcom Married with Children—constituted an accurate representation of the average American. Shot in the midst


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of the American debate over bank and automobile bailouts, the sarcastic comedy-documentary was meant to showcase what awaits America if the government assumes ownership of insurance companies, banks, and the car industry (none of which are government owned in Sweden). The 11-minute satire contained all the stereotypical fallacies of Socialist, government run lives, with robotic-like assembly plant workers a la George Orwell’s big-brother novel 1984. Declaring the streets full of “blond statuesque pleasure boxes” (aside from playing on stereotypes, I never thought beauty was a characteristic of Socialism), the reporter was unable to find anyone truly dissatisfied with their country. The clips of upscale restaurants, joking politicians, fit citizens, and high-tech buildings and factories, conveyed, in a humorous fashion, host Jon Stewarts’ implied message, that if becoming Sweden is America’s worst nightmare, then there is really nothing to fear. Let us also look at a real example of life in Sweden. Martin, 29 years old and living in the small town of Skara, worked as a janitor in a private nursing home while pursuing his bachelor’s degree in international relations (a degree requiring qualifying exams, a written thesis, and an oral defense, more than most Americans endure for the same degree). He then decided to switch paths and become a carpenter, which requires a year of coursework and two years of apprenticeship before a license is granted. Martin received his training position through a public university-private sector research hub and jobs program and went to work for a small private company. On an income of $38,000, he pays 29 percent in state taxes; federal taxes kick in at roughly $45,000. In return he gets health care (with a $15 co-pay to see a doctor of his choice), education (except textbooks), and excellent highways; he, like others, can even sue the government if a pothole causes permanent damage to his vehicle! When Martin turns on the TV, he has 100 cable channels to choose from; he can choose to watch Swedish new casters dressed in Islamic burqas or in miniskirts, turn to an investment show, or enjoy political satire, after which he may bet on soccer games over his G-4 cell phone. If he is interested in buying a home, there are uncountable private financial institutions available, and when he has children he can use his government issued voucher to send them to any private or public school. So Europeans are not suffering Socialism. But how far do freedoms extend? Are Europeans not highly constrained by regulations and taxes? Could they not be even more competitive with fewer restrictions? In fact, there are several areas of the economy where European states are heavily involved, with certain restrictions to which Americans would probably object, so let us take a closer look at the overall economy and business competitiveness.

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Europeans are Overregulated and Uncompetitive: Let Us See Variations The persistent cynicism, corruption, and economic stagnation of the eurozone is only the tip of that particular iceberg. They’re spending everything they’ve got on these enlightened social programs that are depressing their own economy. [E]urope’s lack of world-beating companies . . . 5

For a country to be competitive in an ever more integrated world, it must have the ability to grow, increase productivity, and achieve higher yields on national investments, which in turn allows for increased quality of life. This means economic growth must on average be greater, year-on-year, than inflation (the rise in prices) and population growth. This section looks at whether Europe economies, private and public domains, can compete internationally, while chapter 7 looks more at how Europe is exerting its combined influence globally. Despite greater union influence, restrictions on work hours, and lots of employee benefits (maternity leave, vacations, and holidays, see chapter 6) Europe remains competitive in most areas. Between 2000 and 2006, economic growth was steady and continuous in the western half of Europe (where Britain, along with the Nordic countries, grew faster than the United States), and very high in Eastern Europe, especially in the Czech Republic, Hungary, Slovenia, and Slovakia, and several regions within Poland, Bulgaria, Estonia, and Lithuania.6 By 2007, European countries’ average national incomes (the profits of a national assets and companies anywhere in the world) grew at the same pace as America’s,7 while most European countries had lower budget deficits and the Eurozone (the countries using the euro) posted a trade surplus (they sold more than they imported). Two countries, Poland and Slovenia, were the only transatlantic countries to grow during the recession-induced spring of 2009. In Slovenia, low taxes and low debt helped; in the Polish case, low exposure to the credit problems, productive businesses, and confidence in a government more popular in 2010 than in 2007 kept the country very competitive. The Nordic states, Germany, France, Switzerland, and the Netherlands are continuously ranked among the world’s most competitive economies, as is Estonia.8 According to Insead and the World Economic Forum’s annual rankings of the countries with the skills and network infrastructure


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required to compete in the global knowledge economy, Sweden, Denmark, Finland, Switzerland, the Netherlands, and Norway regularly share the top 10 spots with the United States, and 14 of the top 25 are European.9

Investments Europe provides roughly one-fifth of all foreign direct investments (FDI) in the United States. Even as Europeans and Americans increase investments in China, the United States remains the single largest market for Europeans. The latter provide 70 percent of foreign investments in America, focusing on manufacturing, finance, and wholesale trade. All but four American states receive more than half of all foreign inflows from Europe; seven of every ten dollars from abroad pouring in to my home state of Pennsylvania comes from Europe, and Pennsylvania exports five times more to Europe than to China.10 For example, German BMW and ThyssenKrupp are investing billions in high-tech manufacturing (steel, high-speed trains) in 2010–2011, employing thousands of Americans, and paying them well. European affiliates’ sales in the United States are four times higher than the value of American-bound exports, which are already the largest in the world. The average compensation (wages and benefits) paid by European-owned companies per American worker was $62,300 in 2005, with Finnish-owned companies topping the list at $83,000.11 Pay is thus far above state-average wages, severely denting the myth that foreign ownership dilutes compensation. If you think most American investments go to low-cost Asia, to people toiling in dirty factories for a buck or two a day, think again. Between 2000 and 2007, the European Union (EU) attracted nearly half of global foreign investments, more than half of which came from the United States.12 More than 5,900 foreign companies (including, among others, Nike, Footlocker, and Starbucks) are active in the Netherlands and Sweden alone. Slovakia is now the world’s largest automobile producer per capita (i.e., based on population). Romania has attracted numerous investors in its outsourcing industry.13 American investments in Ireland in 2007 were twice those in South America, and investments in the Netherlands and France were greater than in all of Asia, Canada, and Mexico combined; flows to Slovakia rose 600 percent between 2000 and 2006.14 American corporations make 15–20 times higher profits in “bureaucratic Europe” ($97 billion in 2006) than in China; profits in the Netherlands alone in 2007 were five times those in all of China. Most American investments in Europe are in manufacturing and services. More Germans than Chinese work for American firms and at much higher pay. More than 4 million

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Europeans work for American companies in well paying jobs, and the figure rose by 111,000 from 2001 to 2005, in the midst of the Iraq war controversy and derogatory comments about European cheese-eating surrender monkeys. In 2008 approximately 60 percent of corporate America’s foreign assets were located in Europe, and Britain alone remains home to more American assets than all of Asia.

Companies Rock Many Americans grow up eating Smucker’s peanut butter, drinking Coke, and driving a Ford, Chrysler, or General Motors model vehicle; Nike or New Balance shoes are on millions of feet, cuts are covered with Johnson and Johnson band-aids, and many live in homes built with equipment from Caterpillar or John Deere. More kids recognize Ronald McDonald than Santa Clause, and most will fly on a Boeing made aircraft at least once in their lifetime. These are but a few of the many American giants that have dominated their fields at home and internationally. Today European companies are cornering even larger parts of their sectors’ global markets. Finnish Nokia, Swedish Ericsson, or Volvo; Danish Mearsk, or Dutch Shell, Philips, and chemical giant AkzoNobel; Italian Fiat, and Finmeccanica (helicopters), and Spanish bank Santander (larger than American giant Citigroup); food giant Unilever, German Siemens, and BMW are familiar to most, and anyone who flies or has home delivery of packages knows of Airbus (45 percent of large aircraft production; Boeing has an equal share). You may not have heard of Electricidade de Portugal, the world’s fourth largest wind energy producer, or Finnish Metsa-Botnia, Europe’s second biggest pulp producer (and the largest ever foreign investor in Uruguay). There has been a significant rise in European corporate power. Strong companies naturally seek to expand, and the Europeans come in droves to the United States. An enlightening 2008 article in Foreign Policy entitled “The Coming Euroinvasion” explains how a strong euro, competitive American domestic transportation and energy costs, and an American consumer desiring diverse and high-quality products creates an attractive business climate for Europeans.15 Among the companies bought by Europeans we find Brooks Brothers, Donna Karen New York, Random House, Dove Soap, Bird’s Eye, Pennzoil-Quaker State, Baskin-Robbins, and the Chicago Skyway (a 99-year lease). Private Swedish publishing company Bonniers is one of the largest magazine owners in America, having acquired publications such as Working Mother, American Photo,


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and Popular Photography. To further expand international market shares, European companies are also merging in unprecedented numbers, up from an average of 58 mergers annually from 1990 to1994, to more than 300 by 2008.16 Europe now has more entries than the United States on the world’s top 500 companies,17 and further European expansion is likely. European Aeronautic Defense and Space Company (EADS) is a major defense contractor (helicopters and aircrafts) contributing $10 billion and 190,000 American jobs annually, and in July 2009 it beat, among others, American Raytheon to land one of the most complex security contracts of all time: securing Saudi Arabia’s 5,500 mile border with Iraq and Yemen. EADS also supplied Romania’s homeland security system, and the coastal surveillance systems for France and Germany.18 BAE Systems, the world’s third largest defense company is a top defense contractor for the US government. BAE’s success stems from focusing on areas where American domestic production is lacking or urgently needs expansion, for example, the “up-armoring” of poorly protected vehicles such as the Bradley Fighting Vehicle, and purchasing US manufacturers (e.g., Armor Holdings and MTC Technologies Inc., the latter specializes in technologies to modernize the armed forces and intelligence). European manufacturers of electric-diesel subs are filling a gap identified by the US Navy. “Germany and France both already produce excellent, cost-effective electric-diesel subs . . . that carry nuclear-capable cruise missiles for Israel’s survivable second-strike retaliatory capability.”19 If you are wondering whether the companies mentioned here succeed because governments provide funding and loans, think again: EU law forbids direct government aid to private businesses.

Reasons for Europe’s Competitiveness In the midst of the hardship of the 2008–2009 global financial crisis, a sea-change in attitude was conspicuously displayed to the world. European governments advocated against massive bailouts, hardhanded regulatory changes, and government protections, whereas the prevailing winds in the United States were more sympathetic to government intervention and far-reaching regulations. Only Britain followed the extensive American model of securing mortgages and banks, whereas European countries with strong Social Democratic legacies (Sweden, Finland, and Germany) opposed European wide regulatory changes, convincing even the French and Italians to back off from proposals that would inhibit free markets and competitive business practices.20 French President Sarkozy declared

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that Europe could not afford too much regulation [my emphasis]. Germany rejected all calls for protectionism, and in passing a constitutional amendment requiring a balanced budget from 2016, sent an unmistakable message that a strong economy is only sustainable when living within available means.21 The European Central Bank (ECB) lent to all European countries, and economic solidarity was evident: no country would be allowed to default. A modern world in which German, Swedish, Czech, and other European leaders argue that spending is out of control, market rules should apply, and savings need to increase; these are interesting times indeed.22 This unified approach reflects an integrated and maturing Europe’s confidence and strength, as well as the real changes undertaken to improve its competitive edge and create an attractive environment for investors. The EU’s internal market provides European businesses a large and wealthy market place without cross border restrictions, thus aiding expansion and growth. With service regulations and tax policies becoming increasingly similar across Europe (with some country variations similar to those found across American states), businesses can make use of a large pool of resources and customers in much the same way as the large domestic US market has benefited American companies. A 2000 agreement to make Europe the most competitive market economy in the world by focusing on education and innovation, knowledge intensive sectors, new technologies, and a modernization of social models was followed by other high-level reports stressing the urgency of reforms.23 By 2007 many of the reforms were in place, resulting, for example, in a largely European, rather than national, market for financial services. EU red tape has been removed, and there is better enforcement of existing competition rules. Cross-border wage competition is stiffer, thanks to an increase in labor mobility (a staple of America’s economic success), especially among those under the age of 30, and among professionals. Cross-border recognition of degrees, and the fact that Europeans do not lose health coverage when they move, also helps. Domestic construction monopolies are banned and energy conglomerates are slowly being forced open (restricting ownership by one company of both sources and distribution of energy). EU funding is also available for infrastructure investments, the creation of sustainable jobs, and improving competitiveness in poor and rural areas.24 A 2009 report by Insead conveys impressive progress especially in Estonia, Slovenia, and Hungary, who by 2007 ranked ahead of many longer-standing EU members such as Italy, Greece, and Portugal.25 American companies have long benefited from having the world’s dominant currency, as all international commodities of importance (oil, gold, iron, etc.) are traded in dollars, and most countries’ reserves are also


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held in green backs. Think of the luxury of having your left hand, the US Treasury, issuing debt in a currency whose value your right hand, the Federal Reserve, can to a large extent control. The euro’s rise to international prominence provides the ECB a global role similar to the Fed, and Europeans now benefit in similar fashion from the strength and stability of a coveted global currency. Several Middle East countries are transferring savings into euros, and China and Japan openly worry about the declining US economy and a weakened dollar. Brazil and China agreed in 2009 to trade in real and renminbi rather than dollars. A strong currency means cheaper imports for consumers and businesses (e.g., parts for machinery, services), and protection against currency speculation, which last hit Europe hard in 1992–1993 when traders forced currency values to drop through mass sell-offs, prompting central bank intervention and interest rate hikes to shore up their values (because a weak currency makes repaying foreign debt more expensive). But a strong currency also means higher export prices, one reason Portugal, Italy, Ireland, Greece, and Spain (a group sometimes referred to by the unflattering acronym PIIGS) have seen sharp drops in their exports, along with rising national debts, and higher inflation than other EU members. This is because one currency and one interest rate disallows regional variation, making it difficult to fight regional inflation or housing bubbles, as many Americans had learned by 2009.

Member States’ Reforms Europeans have seized upon what several American studies show: that lower business taxes improve a country’s economic performance.26 Taxes on corporate profits are lower across Europe, ranging from 12 to 32 percent, than in the United States, at 39 percent. France, Greece, Germany, Denmark, among others, lowered rates further and simplified reporting requirements in 2008. The average total tax-burden (corporate profit, employment taxes) in Europe is lower today than in 2000, as is the average number of taxes a business must pay; today it is seven in the EU, compared to nine in America.27 By comparison, China has numerous taxes and corporate profit tax rate of 79 percent. Some skeptics counter that when accounting for exemptions, deferrals, additions, and deductions, the average American corporation pays less tax (27 percent) than their Italian or German competitors (who average 50 and 30 percent respectively), but more than a French or British company (which pays 19 and 24 percent respectively). According to American government

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statistics, effective tax rates for corporations range from 10 percent to more than 50 percent, with the latter applying to a quarter of all American companies!28 On the employment side, labor laws across Europe have been made more flexible and taxes have been cut; France is the extreme, cutting the number of labor taxes from 14 to 2. As a result, European businesses’ labor costs rose only half that faced by American companies between 1999 and 2007. However, despite reforms, labor taxes and social contributions, as well as some labor laws, and bureaucratic hurdles to start a business, remain higher in real terms than in America (see appendix). As the world’s largest export nation in 2009, Germany is worthy of a mention in this context. It specializes in high-quality engineering and high-tech products, from machine tools and drills to cogwheels, much of which is not produced elsewhere, giving it a competitive advantage. Since the turn of the century, most German companies have dramatically improved labor productivity while lowering relative wage-rates, resulting in Table 4.1

European economic data Average annual Gross Domestic Product growth per person, % 1997–2007

Public Debt as % of GDP, 2007

Corporate Profit Tax rates, 2007**

2.4 3.1 1.5 3.7 4.3 1.8 7.2 2.9 1.7* 2.2 1.8

44.2 35 65.1 44.9 23 170 16 40.2 68 58.7 60.1

21 17 22.7 13 13 12 13 16.5 20.4 23.5 23.5

Britain Finland Germany Poland Slovenia Japan China Sweden EU-5 EU United States *EU-5 Author’s calculations. ** Total tax rates see appendix.

Sources: European Commission, EU economic data pocketbook - Issue number 4-2008 (Luxembourg: Eurostat, April 2009), pp.12, 52. http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/ publication?p_product_code=KS-CZ-08-004; European Commission, “GDP and main components” and “National Accounts detailed breakdowns,” Eurostat, 2008, http://epp.eurostat.ec.europa.eu/ portal/page/portal/national_accounts/data/main_tables; US Bureau of Labor Statistics, “Chart Book of International Labor Comparisons,” March, 2009, http://www.bls.gov; International Bank for Reconstruction and Development/The World Bank, Paying Taxes 2009 The Global Picture, 2009, pp. 18-19, http://www.doingbusiness.org/ExploreTopics/PayingTaxes.


47

improved competitiveness and increased profit margins. How coveted and competitive are German products? In 2007, despite an average hourly wage 30 times higher than in China, Germany had a 25 times larger trade surplus per capita. All while, in the United States, union leaders and conservatives never cease to complain about unfair Chinese trade dominance, and America being unable to compete. Many German companies also create reserves to cushion against temporary downturns, such as the 2008–2009 recession, resulting in fewer layoffs and bankruptcies than could otherwise be expected. They do all this while having both employees and managers represented on company supervisory boards, and allowing long-term investments in technology and training to override short-term profit seeking through payroll cuts. These are some reasons why, by August 2009, German economic recovery was evident, exports were rising, and business confidence steadily growing.

Concluding Thoughts We have noted that the majority of global investments go to Europe and the US European compensation is higher, but good public transportation networks, universal health care and education, and cuts in corporate taxes are attractive to investors; throw in 500 million well-off consumers and you have the main ingredients conducive to a good business environment. At the same time, one can ponder whether lower social taxes and fewer regulations would make private businesses even more competitive than today. Total government spending (including purchases and transfers) as part of GDP averages 44–50 percent in European countries; it is much lower in Ireland and Slovakia, where it is roughly the same as in the United States (22 percent in 2009, and rising). It is a truism among economists that the private sector—because of competition and profit incentives—is better suited to economic efficiency than the public sector (government). Yet, Martin Wolf, the chief economic commentator at the Financial Times, and a strong free-market advocate, argues that economic growth depends as much on how capital is spent as who spends it; effectiveness and efficiency matters, an argument corroborated by several studies.29 This is consistent, surprisingly enough, with an analysis from two distinctly Conservative American sources: the Heritage Foundation and the Wall Street Journal. In their 2008 “Index of Economic Freedom,” which measures, however roughly, the underpinnings of market economies, nine of the top twenty countries were European, the United States was

48


seventh. Interestingly, in areas such as favorable business climate, low corruption, attractiveness to investors, financial freedom, and trade, a dozen European countries did better than America. European weaknesses are mainly size of government and restrictions in the labor market (except for Denmark where there are close to zero restrictions on hiring or firing).30 It is safe to say that businesses and investors of all kind see existing and future potential in Europe.

Little Entrepreneurship and Few Private Companies: Not Really We think of the United States as the home of small business and enterprise, so how about European private businesses and start-ups? Well, here American perceptions of Europe lagging are in many ways substantiated. A good indicator of entrepreneurship, and whether a country or region is moving up the social, economic, and technological ladder, is looking at the number and types of businesses that start up, and whether they survive. Small companies and start-ups create more new jobs than large companies across the globe. Excluding financial services, there were 19 million companies in the EU in 2005, and with the exceptions of Italy and Greece we find high levels of start-ups in service and construction. Among those pushing the role of small and medium enterprises as engines of growth, the hardest are Sweden and Finland, Germany, the Netherlands, and the Czech Republic. The private sector now accounts for 90 percent of European industrial output, and as seen in table 4.1 the steadily rising

Figure 4.1

Source: OECD, 2009.31

Estonia

Slovenia

Britain

United States

Spain

Sweden

Slovak Republic

Poland

Businesses with Less Than 20 Employees

Portugal

Norway

Netherlands

Luxembourg

Italy

Japan

Ireland

Greece

Hungary

France

Germany

Finland

Denmark

Czech Republic

Austria

Belgium

18 16 14 12 10 8 6 4 2 0


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level of entrepreneurship has brought private business sector employment almost to par with the United States. Yet there is gloom. It takes 47 days for a small business from filing to opening the doors in Spain, and 38 days in Hungary, only Denmark (5), and France and Portugal (8), can match the United States at 6 days.32 Large bureaucracies result in longer start up time, and the most cited reason (70 percent) for companies going under is also regulatory and administrative burdens, in plain language: too many rules and too much paper work.33 One result: American start-ups have higher survival rates between four and seven years after being established.34 Other contributing factors used to include America’s sophisticated marketing (ads, promotions), distribution (from snail-mail to the Internet), and customer-service system (the customer is always right attitude), but the Europeans have largely caught up in these areas. Mass marketing is just as good, or, depending on your view, annoying; the infrastructure of the delivery system is competitive and hightech, and after decades of customers having to endure pitiful service in most parts of Europe, partial deregulation of labor laws and stiffer competition have vastly improved the quality of service across the continent. Three other problems better explain why Europe still lags the United States in small enterprises. First, Europeans are traditionally risk averse, while Americans sometimes appear to thrive in entrepreneurial risk taking. Americans’ can-do spirit is an enviable trait, as is their ceaseless willingness to try new things, traits only recently discernable in parts of Scandinavia and Britain. Commenting on the difficulty of small business in Spain, a Spanish economist at Columbia University, New York, believes “If Bill Gates lived in Spain, Microsoft would never have existed.”35 Most successful American entrepreneurs first have at least one business fail, but in Europe there is still a heavy stigma attached to bankruptcy, making it harder to rebound and start anew. Some countries have created their own versions of America’s Chapter 11 bankruptcy law (which allows a management to restructure and raise money without creditors sweeping in and taking all the assets). Germany, notorious for its employee-focus, adopted a new law in 2008 which, among other things, eases requirements on repayments and extends the time available for restructuring. After an initial uptick in small- and medium-size business failings in late 2008, the situation improved across Europe by early 2009. A few countries, the Netherlands, Britain, Belgium, and Denmark now actually have higher recovery rates for businesses, and in shorter completion times, than the United States.36 Second, according to the World Bank, seven European countries had higher levels of private capital investments (factories, land, equipment) per capita than the United States in 2006, and venture capital investment (private

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money for research and investments in start-ups) rose by a quarter between 2003 and 2006. But those figures hide very low initial levels, so the actual amount of private funding lags the United States. Capital tends to be easier to attract where people are willing to take risks, and where the environment is conducive to quickly turning ideas into tangible products or services. According to a 2009 Wall Street Journal Europe series (“Europe and the Recovery”), the best way to improve funding is “to scale up, on a European stage, some of the successful schemes for public/private partnership in seed and growth financing that have been pioneered across Europe. Examples include Britain’s University Challenge Scheme of 1999, which provided matching funds for private investment in university spin-out companies, and the Flemish Investment Board, whose co-funding has made the university at Leuven a potent biotechnology incubator.”37 A third challenge for small business relates to education. America has a comparative advantage in its largely decentralized university system, which allows greater flexibility in course offerings, funding, and student recruitment, making for very competitive institutions. Notwithstanding criticism that high tuition limits access, hundreds of American schools have impressive track records of attracting talent, finding private sponsorships and grants, receiving government research grants, producing good graduates, and joining up with local and regional businesses to help start-ups. A 2007 report by the Organization of Economic Cooperation and Development (OECD) argues that institutions of higher education must engage with policy makers and entrepreneurs in their region, provide opportunities for lifelong learning, and contribute to the development of knowledge-intensive jobs.38 Some universities have initiated hubs, hooking up with local companies, and not infrequently local affiliates of multinational companies.39 Since 2005, the French state has “spurred innovation by bringing together public research, universities and companies . . . similar to the information technology pole that sprang up around Stanford University and came to be known as Silicon Valley.”40 Swedish, British, and German hubs have also been established since 2001, but more are needed to attract funding and enable more small businesses to thrive.

Summary and Problems European states have largely harnessed the powers of globalization and neoliberal economics (read: Capitalism with a twist), allowing market forces to operate in most areas. Ireland and the Netherlands have undertaken


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extensive reforms and attract massive investments; Sweden and Denmark, despite high taxes, are among the most internationalized, competitive, and innovative countries in the world; German exports are coveted globally, and Britain and France have used tax breaks and employment incentives to improve business environments and create jobs. At the same time the Lisbon Agenda’s goals of making Europe the world’s most competitive knowledge-based economy, with full employment and greater social cohesion, has some ways to go. Too much heavyhanded bureaucracy is defended by the political Far Left, and many necessary labor and tax reforms remain stalled. Belgium and Italy lag the northern reformers, with high and complicated tax structures, and similar problems apply to Spain and Greece. Southern European countries in general suffer from high domestic business taxes, complex regulations, archaic competition laws (e.g., Italian restrictions on where you can open a bakery or who can drive a taxi and where), and extensive underground economies (“black markets,” see chapter 6).

European Unemployment: Not as Bad as Portrayed Variations [a] society as dedicated as latterday Europe to the belief that life is about sleeping in . . . Europeans work fewer hours than Americans . . . A 35-hour work week, 20 percent unemployment, and nobody can be fired . . . The core fact is that the European model is foundering under the fact that billions of people are willing to work harder than the Europeans are.41

Official unemployment figures are not necessarily good indicators of the job situation as unemployment is calculated differently across the Atlantic. European unemployment figures are “real” in the sense that they include long-term unemployed. An American who is unemployed more than 12 months (temporarily 18 months with the extension through the 2009 stimulus package), or working even one hour per week, is removed from the data. When comparing European and US unemployment rates as calculated in Europe, the United States averaged 6 percent unemployment in the years 2006–2008, reaching 10.7 percent in May 2009. The

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EU equivalents were 8.1 percent and 9.4 percent. If adding part time and discouraged workers who want full-time jobs, the figures rise half again (14 percent in the EU and 16 percent in the United States).42In 2008, the official American unemployment rate was 2 percentage points lower than in Germany.43 At the same time the employment rate (number of people working divided by population) was the same: 71 percent in both countries. This shows that similar to other European countries Germany counts everyone seeking work, even if for more than a year, contrary to the case in the United States where, you do not count: “out sight out of mind.” Making up the remaining difference between the unemployed, employed and 100 percent of the adult population are those in school, stay-at-home parents not seeking work, the disabled, and so on. The point is that even during times when Europe has high unemployment, there are fewer hidden costs, fewer people falling through the cracks of public and private assistance. As in the United States, there are relatively large regional variations with peaks in, for example, Poland, southern Belgium, Spain, Italy, Latvia, as well as eastern regions of Germany. Spain’s unemployment hovers around 15–18 percent, whereas in the Netherlands or Sweden the figures are usually in the low single digits. Youth unemployment is also slightly higher in most European countries, even if Germany has fewer unemployed youth than does the United States. The impressive European figures also conceal a few real problems. The Lisbon Agenda (see above) set minimum employment targets for 2010 of 70 percent of the total workforce, with at least 60 percent of adult women, and 50 percent of the elderly working. As of 2006, less than a third of European regions had reached or surpassed all targets, but more than half had a female employment rate above 60 percent. “The large decline in average annual hours worked per worker was offset by increases in both the employment rate (or employment-population ratio), and the share of the population that is of working age. The employment rate has risen as more women join the workforce and as older workers stay in their jobs rather than retire. [But] Both women and older workers are more likely to work fewer hours in a full-time job or become part of the growing ranks of part-time workers.”44 The highest overall employment rates, and the lowest female employment rates, are generally found in the Netherlands, Britain, and the Nordic countries, the lowest in Italy and Greece. Some countries have incentivized, even forced, retirement at the age of 65 to make room for unemployed youth. Employment rates for those less than 25 are much lower than for the general population, a problem also found in the United States. In 2007, the European Court of Justice ruled that forced retirement is legally justifiable under certain circumstances.45 But enforcing this is politically difficult since many young lack


53

the necessary skills to fill job openings, and, according to a 2009 poll, a majority of Brits and Italians (and Americans) want to work beyond official retirement, even as most French, German, and Spaniards oppose such an idea.46 No European country has lower government unemployment benefits than America, even if compensation is higher in western and northern Europe, excluding Britain, than in the southern or eastern parts. As in the United States, one must have worked a certain length of time and a minimum number of hours to receive benefits. However, whereas an estimated 60 percent of Americans fail to qualify for benefits, the same applies to only 20–25 percent of Europeans. So what is done to promote higher employment? Reforms to unemployment compensation, aimed at incentivizing the unemployed by making it far more lucrative to work, along with assistance to potential employers, aimed at increasing hiring, have been undertaken. Leave it to a beer loving, soccer crazy, high-taxing, northern European country to invent effective labor market reforms that have become a model for countries and regions around the world. The Danish system of “flexicurity” (flexibility and security) began in 2001. It combines extensive social protection for the individual (ensuring that the unemployed or sick do not end up broke or homeless), financial incentives to find work (drastically lower compensation if rejecting a job offer), and reduced employment costs for business, including lax labor laws and low corporate tax rates. Denmark’s unemployment rates are consistently among the lowest in the developed world, and most of the jobs shed since 2002 have been in government, while twice as many have been created in the private sector. Variations of this model—including the principle of cutting unemployment benefits if one refuses a number of job offers—exists in Britain, France, the Netherlands, and Sweden, all of which have unemployment rates equal to or lower than the United States.47 Other efforts include the German “minijobs,” a unique system of parttime employment with a set maximum of hours per week and no income-, payroll-, or social security taxes. These are estimated to constitute roughly 12 percent of all domestic jobs, but no official statistics are kept, so a large percentage of the population may be working legally without it showing in official employment statistics.48 On the upside, employed Europeans are working more. Though both Americans and Europeans work fewer hours per week compared to 30 years ago, the drop has been greater in Europe, and so work hours and working age may need to be extended to raise overall output. The EU’s Working Time Directive (which maximizes weekly work time to 48 hours across Europe) includes so many professional and sector-specific exemptions,

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opt-outs, and waivers that in practice its reach is very limited.49 Dutch law allows most employees to choose work hours, and yet some workers average 60 hour work weeks.50 France’s infamous 35-hour work week was de facto scrapped in 2007, and work hours are rising. It has lower union membership than any other developed country (8 percent), and, notwithstanding indefensible acts such as holding bosses hostage for a day, or engaging in wild-strikes, France loses the same number of work days annually as the United States.51 In a work environment where an increasing number of people do computerized tasks (e.g., programming, research) and/or work from home, data on work hours may be less reliable than in the past.52 But using existing data, focusing only on those actually employed, the Austrians, Belgians, Dutch, French, and Norwegians are more productive per hour than American workers; other Europeans lag behind.53 America’s advantage is evident when data is expressed per worker rather than per hour since many Europeans still work fewer hours than their American peers.

European Citizens Are Overtaxed and Underpaid: Partly True Variations The poorest people in America are better off than the mainstream families of Europe.54

A major report in 2009 again confirms that European incomes are lower, with the average west European enjoying 92 percent of an American income, while the figure in Eastern Europe is roughly 67 percent. Within this region, Slovenia and the Czech Republic are doing best (90 and 81 percent respectively of the EU average), while Romania and Bulgaria lag at half that income.55 On the face of it, American perceptions appear true, but are we missing something here? Once we dissect the numbers a slightly different picture emerges. Income is relative, whether it is high or low depends on what you can buy, also called purchasing power, and, importantly, what you get for your taxes. Think of this: if a tomato is produced and sold in your township or city, it matters little if the value of the dollar has declined or increased versus the euro or the Japanese yen. However, if you buy oil, or a sophisticated machine with parts imported from abroad, the price you pay will rise if


55

the dollar is weak, leaving you with less purchasing power. If inflation stays low, your currency is strong, and most of the imports you buy are paid using your currency, you benefit from strong purchasing power, as discussed earlier. This is one reason why nominal comparisons of income really do not accurately convey Europeans’ wealth. One reason why nominal income is higher in the United States is that there are many times more American millionaires and billionaires than super-wealthy Europeans, thus lifting the arithmetic average. For example, if 1 person makes $10 million and 9 make $25,000, the average income for the 10 is more than a million dollars, but no one could say that accurately represents the income distribution of the 10 people in this example. In 2001, the average American chief executive officer (CEO) earned 200 times the average manufacturing employee, in Britain it was 24, in France 15, and in Sweden 13 times the average wage.56 The income distribution is smaller, meaning if one omitted the top 1 percent of income earners in America and Europe, you would find a much smaller difference between European and American earnings (see table 4.2). Second, transfer funds, government assistance programs such as housing and heating assistance, child support, social security, and unemployment compensation are higher in most of Europe, adding to most people’s disposable income, which is, after all what really matters. Tax cuts and government transfers have led to a rise in real (net, after tax) middle-class income in most of Europe since 2000. Globalization and integration is estimated by one study to also have kept European wages at bay, while reducing consumer prices, thereby improving European competitiveness.57

Table 4.2

Income and inequality Income inequality (low = less inequality)

Sweden France United States Britain European Union Germany Poland Source: CIA World Factbook, 2008.

22 32 45 34 31 27 35

Percent of income by top 10 and lowest 10% of wage earners 22.2 / 3.6 24.8 / 3 30 / 2.1 28.5 / 2.1 25.2 / 2.8 22.1 / 3.2 27 / 3.1

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For example, food prices have dropped since 2000, particularly in Northern Europe, were they declined by roughly a fifth from 2003 to 2006. All the while American food prices rose, and wages for the bottom fifth fell.58 Two other issues rarely mentioned in the media or introductory textbooks help explain why, despite lower official average income, Europeans can have just as high material standards of living as Americans. First, aside from the profligate British, most Europeans, especially the Germans and Dutch, but also the French, Finns, and Swedes, save more of their earnings than do Americans. This allows them to weather downturns. Furthermore, the prevalence of debit cards (rather than credit cards) and commonly higher down payments on homes or cars, means much less individual debt. The exception again is Britain, which has traditionally had much looser financial regulation than other countries (it remains to be seen what regulatory changes follow in the wake of the 2008–2009 recession).

More Surprises on Taxes Calculating tax-burdens on individuals is perhaps even more difficult than for businesses, as exemptions and deductions vary greatly, and type of employment and place of residence also affects tax rates. According to EU data, an average European making €30,000 ($42,000) can expect to pay roughly 34 percent in income tax.59 Overall tax burdens (combined tax on labor, sales, and capital) are, with two exceptions, higher than in the United States.60 Tax ratios range from 29 percent in Romania and Slovakia to 49 percent in Denmark, but they are slowly converging across Europe, and the EU average dropped from 40.6 to 39.8 percent from 2005 to 2007. Among individual countries, France cut taxes for the lowest income earners by two-thirds, Germany lowered them a little less, while Slovakia, the Netherlands, and Sweden raised the personal tax allowance (similar to Americans’ standard deductions on their tax returns), also resulting in less tax. Several countries have implemented flat taxes, with Bulgarians paying 10 percent and the Czechs 15 percent; while the rate ranges from 15 to 25 percent in 6 other east European countries. Sweden, Germany, Spain, and Belgium, among others, also resemble the United States in that most taxes are paid to local and regional authorities rather than the national government. Michael Elliott of Times Magazine commented “In the puritanical version of Christianity that has always appealed to Americans, religion comes packaged with the stern message that hard work is good for the soul. Modern Europe has avoided so melancholy a lesson.”61 The first sentence is spot-on, but the second holds less and less true. Many Europeans work long and hard to establish and prosper in business, and enjoy it; the Estonians, Polish,


57

Hungarians, Greeks, and Czechs work many more hours than do Americans, and the Spaniards, Portuguese, and Finnish are not far behind.62 While overtime taxation in Scandinavia is more than 50 percent, France exempts most overtime from any tax, and Lithuanians, Estonians, and Slovaks, pay less tax on overtime work than many Americans. If you are a top executive in Europe, then you are also better off today than two decades ago. Toptier tax rates have come down by a quarter across Europe since 1995; the European average was 37 percent in 2008. Several countries now have lower top tax rates than America’s 39 percent. Romania dropped its top rate by 40 percentage points! That means if you previously paid 50 cents on a dollar earned, you now pay 10 cents. France has lowered its top rate 22 percent since 2000, on the other hand, in Denmark you still pay up a maximum of 59 percent on earnings above the national average income.63 Tax on capital can be as high as 50 percent in Cyprus, but a mere 10 percent in Estonia, while most cluster around 20 percent, similar to the American rate.

Why Put up with All These Taxes? First, let us remember that social services and leisure are valued differently by most Europeans than is traditionally the case in the United States. Some citizens do work long hours, while many do not want to, even if this means lower income (compared to what one could possibly earn by working more hours).64 Time away from work and time spent with family, friends, and traveling remain a greater priority among most Europeans, particularly in western Europe. Since leisure itself is highly valued, taxes must be higher to pay for the extra vacation. Yet we should not be surprised if Americans say they would make the same trade-off if only their employers would permit it. Levels of compensation and other government programs are further discussed in chapter 6. The Europeans support paying taxes to provide what they consider fundamental basic rights (health, food, housing, and elder care), discussed in chapter 6. A few interesting facts should cause pause. • In the purported egalitarian mecca of world history, Sweden, the top 1 percent of income earners own as much of the country’s wealth as in the United States. In tax heavens such as Luxembourg and Switzerland that percentage is even higher. • Teachers have it pretty good. In 2004, a primary education teacher with 15 years experience could expect to make $46,000 in Germany (where public school teachers pay fewer taxes too), and all west and

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• • •

•

•

• • •

•

northern European countries’ public school teachers averaged earnings above their country’s GDP per capita.65 Minimum wage is higher in all of western Europe (aside from Britain) than in the United States, but adjusted for cost-of-living, it is lower in Eastern Europe. Europeans average 25 days of paid vacation, Americans 14, and Europeans pay far less for airfare than do Americans. How about $30 London-Warsaw, or $23 Stockholm-Riga? Workers in central and Eastern Europe have significantly increased productivity since 1995, with Slovenia, Hungary, and Poland leading the pack, but average pay remains half of their west-European peers.66 This is attractive to investors—American and European—but has also spurred labor emigration to western Europe. Value Added Tax (VAT), the European equivalent to our sales tax, on food and restaurant visits is lower in many European countries when compared to American states, and most European countries lowered their rates in 2009.67 In Europe, labor tax and VAT combined make up an average 75 percent of all government tax revenue, only a quarter comes from tax on capital and business. In the United States, labor and corporate taxes account for 75 percent of revenue.68 All but one European country lowered income tax rates in 2007, on average they dropped nearly 2 percent.69 17 percent of Americans live below half the median income, almost twice as many as in Europe (see chapter 6). A cup of coffee costs almost twice as much in a café in Stockholm or Helsinki as in New York, but a pound of quality coffee in a Scandinavian supermarket is almost half the price you pay in New York or Syracuse. A sandwich costs the same. The cafes? They are usually full in all three cities. High quality wine is cheaper in Stockholm and Paris than in Chicago or New York, but taxes on liquor are so high a mixed drink will run you nine dollar in Brussels, Belgium, compared to five in East Stroudsburg, PA.

Summary European integration intensified internal European competition leading to a harmonization of rules that have helped make Europe very prosperous and attractive to investors. We have seen how purportedly government-heavy


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countries such as Sweden, Finland, or Belgium are actually more coordinating, establishing policy but allowing companies to compete, flourish, or die based on their own performance. Britain in many ways resembles the United States, with few financial regulations but relatively high corporate taxes. France, Italy, Portugal, Poland, and Czech Republic, among others, are hybrids where the government still has a heavy hand in many areas but where the coordination model is increasingly winning out, as indicated through recent tax and labor market reforms in France and Spain. The Baltic states, and in particular Latvia, took a hit in 2008–2009, with house prices and foreign investments dropping, accompanied by soaring unemployment.70 But as one of the world’s fastest growing countries in the first five years of this century (doubling its output), Latvia is still much better off today than in 2000, and public support for Capitalism remains largely unaffected. Similar to the worst hit states in the United States, membership in a union of states helped boost international confidence as the government restructured the economy, borrowed money, and cut expenditures, setting Latvia on the path to recovery. At the same time, most of the economic policies, problems, and advantages in Europe and the United States discussed earlier are what is called structural: they are part of existing regulatory and intuitional arrangements, and they do not automatically disappear after a recession. Scandinavian and Slovenian budget surpluses may return, albeit in smaller fashion, while Greek and Italian deficits will worsen without real far-reaching reforms (see chapter 6).

Suggested Readings and Web sites 1. European Commission, Europe and America: An Economic Partnership (The Delegation of the European Commission to the United States, 2008), http www:// eurunion.org. 2. Steve McGuire and Michael Smith, The European Union and the United States Competition and Convergence in the Global Arena (New York: Palgrave Macmillan, 2008). 3. Daniel Hamilton and Joseph Quinlan, The Transatlantic Economy 2008 Annual Survey of Jobs, Trade, and Investment between the United States and Europe (Center for Transatlantic Relations: Brookings Institution Press, 2008). 4. Center for International Competitiveness, Index of European Competitiveness, 2006–2007, http://www.cforic.org/pages/european-competitiveness.php


Chapter 5 High-Tech Gizmos, Web-Surfing, Cells, and Not-So Green Power

Europe Suffers A Lack of Innovation and Technological Deficiencies. It’s Getting Better. Variations Economically, intellectually, scientifically, and politically, the EU is a deadend, a goner . . . 1

Europe attracts lots of research and development (R&D) funds from abroad. American firms investing in Europe bring capital for R&D, spend 70 percent of their international R&D in Europe (compared with only 15 percent in Asia), and receive tax breaks from European Union (EU) countries.2 Of the big five countries, France and Spain provide five times higher tax relief per dollar spent on R&D than does the United States; Britain has twice the tax relief and also very lax employment and repatriation of profit rules. Intel, Oracle, and Microsoft are among the many companies establishing new research hubs, and expanding others, across Europe. They also team up with European universities and businesses, or collaborate on projects partly sponsored by the European Commission. Microsoft Chief Executive Officer Steve Balmer said, “To compete in a global, innovation-driven economy, we need to draw on the talent and skills of the world’s smartest, most creative minds. Increasingly, we are turning to Europe to find the talent we need. With 2,000 scientists,

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engineers, and developers, Europe has Microsoft’s largest concentration of R&D staff outside the United States.”3 European companies account for more than 60 percent of all R&D performed by foreign affiliates in the United States but what about European companies in Europe? European states aim to spend 3 percent of Gross Domestic Product (GDP) on R&D, but only the Nordic countries are investing that amount or more (see table 5.1), while simultaneously improving conditions for turning innovation into a business. A 2006 review of Europe’s own goals confirms that “In the [specific] area of innovation, widely recognized as critical for economic growth and competitiveness for countries at advanced stages of development, the US has higher scores than all countries.”4 While slowly changing, for example the European Institute of Innovation and Technology opened in 2008, R&D has long remained underemphasized in both universities and business.5 Today the West depends on R&D as a major force of economic growth. German universities first pioneered scientific research institutions in the 1960s, then linking up with firms, who in turn were among the first to develop in-house R&D. But funding cuts hampered progress.6 For example, both Germany and the United States invested heavily in biotechnology as it emerged in the 1960s, but 40 years later the American biotech sector was 10 times bigger. Two scholars argue “The crucial factor is that diffuse US support for basic research allowed the organic development of the sector. German efforts . . . were hampered by the dominant pharmaceutical firms, which resisted greater competition, and weak incentives in the university system to transform basic research into patentable innovations.” 7 Today, university research, fundraising, and private investment have somewhat improved.8 There are more than 400 German biotech companies, 80 percent of which are small- and medium-sized private companies. European public support for university science programs and research is high and perceived to have a positive effect on society; more than 80 percent believe industry research and the development of new products are positive.9 European countries, especially the smaller ones (e.g., Sweden, Finland, Ireland, and Denmark), have realized the vast gains from investing in education, encouraging competition in R&D, and embracing cutting edge technologies. In one case, Tekes, the Finnish national technology agency, in 2005 doled out research support to universities and businesses the tune of $10,000 per citizen; the comparable amount for a similar American agency would be $300 billion.10 One way of increasing resources is through research hubs (see chapter 4), another is cross-national research; pooling EU, public, and private funds, as well as researchers. A 2008 Eurostat report shows a clear correlation between higher R&D spending and patent applications.11 More than half of all contemporary patent applications stem

In Innovative, High-Tech, Not-So Green Table 5.1

Sweden Finland US EU 5 EU Germany Slovenia Poland

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Research and patents R&D as a percent of GDP

Total international patent applications per 1 million inhabitants

4 3.5 2.6 1.8 1.91 2.51 1.54 0.56

152 223 100 132 103 269 30 3

Source: Eurostat, 2008. Statistics in Focus 107/2008.

from cross-national cooperation, and again it is the northern Europeans (Germany, Switzerland, Finland, and Sweden) and Japanese who are doing well and are ahead of the United States.12 There is a great competitive disadvantage, with no end in sight, for small European businesses and entrepreneurs. Imagine if you, after inventing an impressive new automobile engine system, had to file, and renew annually, patents in each of the 50 American states, and then, in addition, file and pay fees in other areas of Europe, Asia, and anywhere you wanted protection. This is what European companies have to endure. Even after receiving a European patent, it must be validated and upheld in each country, and national courts can strike down patents even if a neighboring country’s court upholds it. Annual fees can amount to $14,000 per country, much higher than in the United States or South Korea. It is impressive that despite government disagreements on establishing one European-wide patent so many European patents are in fact filed. A few interesting technological feats stemming from European innovation: • Europe’s Space Center in the French Guiana launches more commercial, and increasingly scientific, satellites than anyone else. American satellite manufacturer Terrastar has had more than 30 spacecrafts launched by Arianespace, and there is now a smaller satellite launcher, Vega, for low-orbit scientific and observation missions. • Europe has its own global navigation system, Galileo, which is expected to be fully operational by 2013.

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America’s Perceptions of Europe • The European pressurized reactor (EPR) technology is a third generation nuclear power technology developed by French AREVA and German Siemens. It has extensive safeguards such as 8 feet thick walls to withstand the impact of a jetliner and 3 extra backup cooling systems should something go wrong. The Union of Concerned Scientists calls it the safest system in existence.13 • The Nintendo Wii games console and iPhone, which react to hand movements, are made by the French-Italian company STMicroelectronics, the world’s third largest semiconductor chip maker for wireless communications. • Sweden is becoming a computer games capital, with university gamedevelopment programs, and France offers tax subsidies to game developers.14 • French Telecom’s Orange mobile phone business is leading the pack in expanding broadband Internet access in Asia and Africa. • In 2009, Shadow Robot in Britain developed a hand that mimics human dexterity. The hand then moved on to become part of an EU program to develop machine vision and other intelligence based features, the results of which we will see in 2010 and beyond.15

Europeans Have Less Internet and Cell Phone Capabilities: Quite the Opposite This is not really perpetuated in the media, but after many years of students, friends, and others going on about the new cell phones, flashy computers, and digital cable speed, the urge to include a section on how Europe is actually fairing was irresistible. Europe is actually ahead of us in many areas. Much of the cell phone technology we enjoy originated in Europe, and many new innovations still do. Scouring the room in a café in Helsinki, Finland, one afternoon I realized that every person was using their cell phone. A couple next to me were previewing a movie, an older lady was deeply engaged in a phone conversation; you get the picture. None of this of course raises any eyebrows today, but I am referring to a day in June of 2001, before American Facebook and 3-G phones dominated American school yards. Returning in 2008, I realized one could check bus arrival time and pay the fair with one’s phone; in the land of Nokia, cell phone technology has always been cutting-edge. Walk down any street in almost any European country and you would think people were born with a cell phone attached to their ear. Estonians,

In Innovative, High-Tech, Not-So Green

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Czechs, and especially Italians, love them so much that they average one and a half phone for every woman, man, and child, the rest of Europe trails by just a hair. Many Middle East and Asia countries have equally high rates, while, to the surprise of my text-obsessed students, Americans rank 72nd, behind Uruguay. Many friends and colleagues in Belgium, Finland, and Sweden each own three to four phones. This is convenient when visiting. I borrow a phone, buy a prepaid phone chip, insert it, and call. The deregulation of the telecommunications industry also means cell phone calls are much cheaper in Europe than the United States. Today Denmark, the Netherlands, Norway, Switzerland, Iceland, Sweden, South Korea, and Finland lead broadband penetration, and the strongest per-capita Internet subscriber growth in 2007 was in Europe, especially the Slovak Republic, Greece, and Norway. Internet access and usage is higher in 9 European countries than in the United States, and within 10 percent of American usage in most other countries.16 France also has the least expensive monthly fee for broadband at $22, half of the average price in America in 2007.17 Speeds are also lightening. A 75-year-old Swedish woman received the fastest residential uplink in the world from her network-export son. At 40 giga-bits per second, it takes two seconds to download a full-length film.18 Europeans again surprise many in that three quarters of Internet users believe they are personally responsible for protection against Internetrelated security hazards; only a third feel that public authorities also have a responsibility regarding problems related to online security.19 Examining the environment (laws, infrastructure, politics), people and business readiness (education, equipment), usage (individuals, government, business), totaling 68 variables in all, the World Economic Forum ranked Denmark the world leader in information and technology readiness in both 2008 and 2009. Sweden and the United States followed, and Europe held seven of the top ten spots. Perhaps most surprising is that business-friendly America ranks 19th in the regulatory environment section (ease of business), trailing a dozen European states.20 From 1995 to 2006, information and communication technology services, as a share of the domestic economy, grew fastest in Finland, Ireland, the Czech Republic, and the Netherlands, and Sweden and Finland have four times as many communication technology patents as the United States (per 1 million people).21 This expansion is supported by the EU where the commission in June 2009 announced €250 ($340) million for R&D to develop the hardware and software platform for the implementation of Radio Access Network (RAN) technology, allowing mobile telecommunication operators to use a single platform for all networks. In other 2009 stimulus funding, €1billion ($1.4billion) was designated for

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Table 5.2

Computer and cell phone use Computer usage, % Households with Cell phones per of population 2007 Internet access, % 2007 100 persons, 2007

Sweden Britain France Germany United States Italy Czech Republic Slovakia Poland European Union Japan Switzerland

82 73 73 76 80 41 73 76 50 63 66 63*

79 67 49 71 61 44 35 46 41 54 60 71

115 118 84 118 85 134 127 111 107 107 85 107

* Households. Sources: Pew Research Center, Eurostat, CIA World Factbook. The full question reads: Do you use a computer at your workplace, at school, at home, or anywhere else on at least an occasional basis? “World Publics Welcome Trade – But Not Immigration,” October 4, 2007, Pew Research Center’s Global Attitudes Project, http://pewglobal.org/reports/display.php?ReportID=258; European Commission, “Phone Subscriptions (per 100 inhabitants),” and “Household Availability of Computers,” (Luxembourg: Eurostat, 2007). http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/.

improving broadband Internet access in rural areas.22 The US Secretary of Labor also acknowledged that technologically other countries are further ahead in many areas than the United States, where especially rural regions suffer a lack of access to much recent technology.23

Europeans Are Tree Hugging and Carbon Obsessed Environmentalists: Actually, Their Talk Is Better Than Their Walk Variations Europeans have totally given themselves over to kookery on this whole global warming, Kyoto mess.24

This is an area where American perceptions ring far truer than most Europeans care to admit, particularly as perceptions relate to renewable


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energy and emissions of carbon dioxide (a.k.a. “green house gases”). There is no denying that modern, popular, environmental consciousness began in western Europe. Going green was made hip in countries such as Germany, led by social and not-for-profit groups, sometimes morphing into, other times complemented by, political parties with environmental agendas. Few environmental parties have solidified their base and presence such as the German Greens (the Swedish come close), who are now securely in parliament and even served in government from 2002 to 2005. Europe’s ability to claim international leadership on environmental issues stems from its united stance in drafting and ratifying the 1997 Kyoto Protocol aimed at combating climate change globally, as well as longstanding practices such as extensive mass transit, and less packaging on purchased goods. Stronger government regulations were in place earlier, particularly in western Europe, than elsewhere in the world, along with generous tax incentives, which helped promote numerous successful renewable energy companies. All parties and governments across Europe agree on the need to stem climate change, but still disagree on the details of how to proceed. Member states decide what energy sources can be used, but the EU (the council and the commission) is increasingly involved in defining energy choices by way of setting targets on renewable energies and greenhousegas reduction.25 European governments agreed in 2007 that by 2020 Europe shall have reduced carbon emissions by 20 percent, and renewable sources shall account for one-fifth of the EU’s energy consumption (up from 10 percent in 2005). In 2009, European finance ministers approved €4 billion ($5.2 billion) for a series of energy infrastructure projects, in addition to subsidies already in place to encourage investments in alternative energy by utility companies and households. Europe is increasingly bestrewn with windmills, solar panels, tidal power stations, and energy-producing sea-snakes (wave power generators). Europe produces a quarter of global solar energy, twice as much as the United States, but equal to that of China and Japan. Energy efficient motor vehicles and “green” buildings increasingly dominate urban residential, commercial, and industrial sectors; perpetual investments in mass public transit compliments ubiquitous bike and pedestrian paths. Europe’s ecological “footprint” (the surface area required to supply a city with food and other resources and to absorb its waste) is approximately half that of the United States, while maintaining the same standard of living. Cities and municipalities across Sweden, often working with citizen groups, are creating new local economies based on renewable energy, public transportation, organic agriculture, and rural land preservation. In

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2001, Overtornea became the first municipality to completely wean itself off fossil fuels. Furthermore, American mayors examining European cities noted how sustainability can also be economically beneficial, “Public transportation is free . . . and more than 200 new businesses have sprung up.”26 Cecilia Malmstrom, Sweden’s minister for Europe, argues “Sweden combined strong climate responsibility with economic growth. You can combine them, there is no need to just have one or the other.”27 The midsize city of Kalmar (population 250,000) in southeastern Sweden now gets more than two-thirds of its energy from renewable energy sources, while benefitting from lower fuel costs and preserved jobs, all without compromising living standards or abandoning cars.28 In total, more than 60 ecologically sound municipalities now exist across the country, and more exist throughout Scandinavia. Germany has more wind power and solar panels per capita than anywhere else, and dozens of German communities are mostly self-sustaining. They use everything from ultrathin photovoltaic panels, to windmills, to cow manure. This famously wet-climate country achieves these results while simultaneously creating good paying jobs; the Germans would not be going down this road if it was not economically beneficial. In fact, “employment in Germany’s green-energy sector . . . is expected to pass the auto and electrical engineering industries to become the nation’s No. 1 employer by 2010. Despite its cloudy climate, the nation now has more than half the world’s solar-power generating capacity, and is the leading destination for green technology investment with $14 billion invested last year alone.”29 With solar panels on houses, German consumers can feed excess energy into the grid where electricity companies are required to buy the energy at a government set minimum price, thereby allowing home owners to recoup the cost of installment, and over time also make a profit. The feed-in law intends to both incentivize consumers and ensure long-term investments in alternative energy production, and prices on energy have dropped, offsetting increasingly expensive fossil fuel.30 Feed-in exists in legal or voluntary form throughout Europe, and other countries around the world look to follow suit, as do several American states. If the thought of price control seems hard to stomach, check out the US government guaranteed minimum sugar prices for domestic farmers; it is equally deplorable. One benefit, if you can call it that, of having a large portion of the price of gasoline made up of taxes, is that price fluctuations on gasoline in Europe are small; in contrast, Americans saw a 90 percent rise followed by a 70 percent decline from July 2008 to May 2009. Even at six dollars per gallon Europeans still love to drive, and do so no less in 2009 than in 2000 (use of public transportation has also stagnated). One reason people


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can afford to drive is that most vehicles have good fuel economy. Even after the 2009 increase in American mileage requirements (the so-called café standard), Europe, Japan, and even China have higher mileage-per-gallon (mpg) requirements. BMW and Mercedes are known for their luxurious drive, but even they have improved their fuel efficiency, and smaller cars are generally winning out among the larger European public. Volkswagen’s Polo (voted best small car in 2008 in entrepreneurial Australia) is rolling off conveyer belts as a “world model,” rare in this niche industry. I drove one in the summer of 2008. It accommodates 4 adults, and averages 60 mpg highway at 65 miles per hour, thus resulting in the same cost-per-mile as my American vehicle filled with cheaper gas but getting only 24 mpg. All manufactures of vehicles used for public transportation throughout Europe are now required to provide estimates of lifetime costs for energy consumption, carbon dioxide- and pollutant emissions, thereby enabling public procurement (national, state, and local) of more environmentally friendly vehicles. All buses in Stockholm and Paris are also electric or hybrid and more cities are following suit. Government incentive schemes and private entrepreneurship have contributed to citizens and businesses across Europe recycling up to two-thirds of all waste, with Austria topping the list. Biogas, the use of food scraps and other biodegradable components to create methane gas, to fuel and heat factories and homes are in place across Europe, from Spain to Sweden, France, and Germany. However, compared to several European countries (Greece, Portugal, Italy, and Britain), the United States is not doing too shabby. According to the US Environmental Protection Agency in 2005, the United States recycled 28 percent of its waste, twice the rate 15 years before.31 According to the sustainability index erected by Yale and Columbia Universities, and which uses a number of factors to measure a country’s ability to protect the natural environment over several decades, Finland is the most environmentally savvy country. Sweden, where 40 percent of total energy consumption comes from renewable sources, is second, Denmark (25 percent), and Germany (14 percent and rising fast), follow thereafter.

Problems Europeans are more practical and less idealistic than their words convey. Approximately 90 percent believe in conserving nature, and less than half believe humans have a right to exploit nature in the name of progress, but more than 60 percent believe it is nonetheless inevitable (within this group we find such sentiments in 70 percent of self-identified conservative, and

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half of leftists). This shows a realistic human trait: fearing they will have to, but wanting not to, sacrifice comfort any more than anyone else.32 This point is crucial, European citizens and businesses would never accept the transformations of energy and recyclables discussed here if they were not economically beneficial. The Europeans may have a stronger “moral consciousness” than most others, but it does not supersede economic concerns and material well-being.33 Europe has a carbon emissions trading system in which companies are allotted emissions credits, and unused credits can be sold to companies unable to remain at or below their allotted amount. This reduces overall emissions while encouraging companies to investment in cleaner energy.34 A 2008 American study of this system concluded “the system has worked much as it was envisioned . . . it established a European-wide carbon price; caused businesses to incorporate this price into their decision-making; and created the infrastructure for a multi-national trading program . . . emission reductions were realized in some covered sectors”35 Others, many of whom support environmentally sustainable initiatives, have criticized the program as ineffective and full of gaps.36 Though several European countries have substantial amounts of renewable energy, and bearing in mind that per-capita carbon footprints are extremely difficult to calculate, several studies show that levels have nonetheless risen since the 1960s and have only slightly leveled off, rather than declined, since 1990.37 Europe is thus behind its own schedule for cutting emissions and looks unlikely to reach its set target for renewable energy (see above). Worst is Spain, which has done worse than the United States, in cutting green house gases.38 As green targets appear unattainable, European countries have turned to an old proven technology to reduce emissions: nuclear. Finland and France are world leaders in nuclear technology, and twothirds of their own domestic energy is nuclear. Numerous countries that vowed to decommission nuclear power plants over the coming decades and switch to renewable energy sources have reversed their decisions. Sweden, Italy, and Spain are now undertaking expansions, as are Britain, Lithuania, Slovakia, Romania, and soon Poland. Germany, the last hold-out, is set to revisit its decision to halt nuclear expansion in 2010. In addition to realizing that alternative sources cannot satisfy rising energy demands in the foreseeable future, as well as the fact that nuclear power remains cheaper per kilowatt than alternatives, a political reason for the return to nuclear looms large. Europe gets 40 percent of gas and 25 percent of oil from Russia, who in 2007 and 2009 cut off natural gas supplies to Eastern Europe for two weeks, in the process turning Slovak and Romanian houses into igloos. A 2009 agreement on a pipeline supplying natural gas from Azerbaijan, Turkmenistan, and potentially other countries, but bypassing


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Russia, represents a major break from dependency on Russian supplies, even if the pipeline is not expected to be operational until 2012.39 Despite feed-in laws and alternative energy sources, most European nations have failed to fully open up their energy markets (separating producers and distributors), thus allowing big national companies to control markets. The European Commission, concerned with competition and lower prices for consumers, has initiated legal actions against several countries to force open energy conglomerates.40 Europe is also losing its lead in alternative energy generation and manufacturing to the United States and China. European companies still hold a majority of intellectual property rights in areas such as wind turbine technology, and companies such as German solar panel manufacturer Q-Cells, Danish Vestas (which has one-fifth of global market for wind turbines, with 2,500 employees in Colorado, United States), Swedish Borevind AB (wind turbines), or Italian Moncada (which experiments with combining solar panels and wind turbines in the same fields on Sicily) remain global leaders in their fields. German Wurth Solar is set to market lighter and cheaper thin-film photovoltaic cells (that convert sunlight to electricity and are the building blocks of solar panels) than currently exists, and which can convert up to 12 percent of the sunlight they receive into energy. However, in 2008, the United States overtook Germany to produce more total renewable energy than any other country. China added, as a percentage on previous year, more wind capacity than any other country but the United States, and China also overtook Japan as the biggest manufacturer of photovoltaic components.41 It remains to be seen whether European quality can retain its competitive edge in the renewable energy sector. Finally, sustainability also includes agricultural practices. When, in 1998 the European Food Safety Authority approved a pest-resistant corn variety widely used in the United States and Latin America, it signaled a small but important shift in EU policy. Then, in April 2009, Germany reversed its position, declaring the product an environmental danger, even as the commission was arguing that a ban would be illegal since the product was already approved.42 Such erratic shifts not only hurt business— many fear that some German biotech firms may leave—but could trigger international trade disputes with the United States and others affected by any European import restriction or ban. European hesitancy toward most genetically modified foods is also hypocritical as some farms across the continent utilize some rather unpleasant force feeding practices. In sum, the Europeans use less energy than Americans, recycle more than most, and have made significant inroads on alternative energy sources. However, on the latter point they remain far below their own declared targets.

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Suggested Readings 1. The European Institute of Technology’s Web site is a good place to see how Europe is attempting to catch up with the United States and Japan. http://eit. europa.eu. 2. European Union, 50 years of Protecting Europe’s Environment, EUtube, video, posted 2007, http://www.youtube.com/user/eutube#play/user/076DFAC2 91E71024/21/uTEMFKKuKxE. 3. European Union, A Journey through Time, 50 Years of Information and Technology Progress, EUtube, video, posted 2008, http://www.youtube.com/ user/eutube#play/user/076DFAC291E71024/34/_iFv9CkI3nY. 4. An easy to read introduction to EU laws and regulations on the climate. European Union, “Tackling Climate Change,” Summaries of EU Legislation, http://europa.eu/legislation_summaries/environment/tackling_climate_ change/index_en.htm.

Chapter 6 The Things We Want in Life: Health, Security, Work, Culture, and Quality

European Countries Have “cradle to grave security”: No More Variations Europeans are taxed so high because government provide for everything, healthcare, doctors, schooling, resulting in no individual choice. . . . as in Europe where the welfare state takes care of you . . . The comatose states . . . [Europe] has managed rights and permanent welfare . . . [s]nubs its nose at the very tenets of classical liberalism. They’re spending everything they’ve got on these enlightened social programs that are depressing their own economy. We will shortly become like Germany, France, the United Kingdom or Sweden—a socialist democracy in which the government dominates the economy, determines private sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.1

Background The welfare states in Europe have their historical origin in the many revolutions, long class struggles, and labor union battles for social protection,

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assistance programs, and job security that have characterized Europe for more than a century. The stronger class divisions in Europe were fertile grounds for unions and revolutionaries aiming to change power structures and level the playing field. Some measures were implemented in different countries around the turn of the twentieth century, but the post-World War II economic boom enabled a vast expansion of social provisions and assistance programs. As prosperity grew in the 1950s and 1960s, west European countries adopted extensive social welfare provisions, without rejecting the right to private ownership, civil rights and liberties, or international trade. As European societies developed materially, and as Europe slowly integrated economically and politically, public assistance programs became accepted as part of what government should provide to ensure that the sick, the poor, the elderly, and the young, would have access to basic human provisions. Though many countries (e.g., France, Sweden, the Netherlands) established overly generous programs-subject to abuse, capitalism, private enterprise and trade, were always prevalent. As discussed in this chapter, vast reforms began across Europe in the late 1980s and early 1990s that have dramatically altered the extent of social safety nets across Europe. Sweden and France are good representations of what constitute European welfare states in 2010. The former is governed by a coalition led by conservatives, tax rates are declining, business activities are increasing, education levels are rising, and constitutional guarantees of free speech are unquestioned; health indicators are among the world’s best, but there is rapidly rising income inequality. France is also led by a conservative government. The French have some of the highest productivity in the world, their health care is dominated by private hospitals and private doctors, and there are declining rates of social and economic inequality.2 Today the vast majority of European citizens share fundamental values focused on solidarity, equality, human dignity, and the right to health and housing, all enshrined in treaties (legal documents) such as the European Social Charter and the Charter of Fundamental Rights. European social models are premised on a communitarian assumption that all of society suffers if vast numbers of people fall short of their full potential. Society (government) has an obligation to provide the basics (health, education) necessary for a person to be able to participate productively in society. Furthermore, not tending to those who are unable to contribute to society (e.g., due to illness, disability, old age) is also unacceptable since the resulting social misery (poverty, crime) becomes an impediment to expansive liberty, individual productivity, and overall prosperity.3 This perspective does not absolve individuals of personal responsibility—we saw in chapter 4 how competition is promoted and certain economic inequality is tolerated—rather it points to a system of institutions geared toward keeping people healthy, working, and motivated.4

The Things We Want in Life

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It is often overlooked that there are three general types of European welfare models;5 they reflect philosophical divergences regarding the areas and scope of government (public) responsibility and help explain difference policies across Europe. One model is the social-democratic, with high-quality public services such as schools, hospitals, roads, and generous means-testing (assessment of need based on income and assets) of programs such as unemployment pay or disability. Half of the costs are borne by the government and half by employer and employee contributions. Denmark and Norway are the only real examples of this model left today. The second model is the corporatist (also called conservative) model, consisting of insurance-based welfare-schemes that are administered mainly through unions and employers. Germany, the Netherlands, Belgium, France, Spain, and increasingly Sweden fit this category. There are strong family structures, moderate income redistributions, and greater reliance on social contributions than taxes (there are many charities and nongovernment groups providing social services). The main goal of the system is to ensure continued economic well-being. Only approximately one-third of the cost of social protection programs are paid from general government funds, the rest are contributions shared by employers (most of the cost) and employees. For example, the Netherlands and Germany do not provide citizens with welfare benefits through a centralized state-run system, but rather via a complex network of national agencies and independent regional and local entities, some public, some quasi-public, and many private. Benefits are linked to past contributions from earnings rather than to need.6 The more recent democracies in central and Eastern Europe tend to resemble a mix of the first (social-democratic) and second (corporatist) models, with Bulgaria, Czech Republic, Hungary, Poland, and Slovakia having some social expenditures and transfer payments, but mostly relying on social-insurance systems rather than tax-funded welfare.7 A third version, the Anglo-Saxon model, is found largely in Britain and Ireland (and also in the United States). Basic services are often only available via means-testing, social protection programs tend to be funded the same way as in the corporatist model, but transfer payments are less generous, and inequality is relatively high. Fewer benefits tend to promote increased labor participation, thus overall unemployment tends to be lower than under either of the other models.

Social Programs Aside from in the Anglo-Saxon model, social assistance programs are “automatic,” meaning public spending on different assistance programs

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(food aid, unemployment benefits, housing assistance) rises faster in an economic downturn, when people need relief the most, and falls when times are good. Since the scope of these programs are greater than in the United States, studies confirm that European states’ redistributive policies have greater effective capacity to alleviate poverty, than the American system.8 The Scandinavian countries, the Netherlands, and Belgium reduce poverty rates by roughly 75 percent after taxes and assistance programs; in the rest of Europe it is 10–15 points lower, while American government transfers eliminate only one-third of poverty.9 No doubt you will find low income areas and poverty in every European country, but anyone having traveled throughout the American south should pause before being too critical; we have a lot of work to do in our own back yard. As in America, European cities are wealthier than rural areas, the north is richer than the south; Belgium’s Vlaams Brabant district is richer than southern Sicily, and so on. Let us look at some of the things affecting all citizens at some point in their lives policies.

Parental Leave Paid maternity leave is guaranteed throughout Europe. For many, this exemplifies the difference between a pampered, sclerotic Europe, and a lean, competitive United States. But we have seen that European economies and businesses are competitive, and, upon closer examination, we find the most extensive parental leave guarantees in some of the most vibrant and competitive economies: Scandinavia, Britain, and Germany. The length of permissible leave ranges from 13 weeks in Malta to 98 in Norway, with the average being approximately 20 weeks of legally guaranteed leave. Furthermore, for most of those weeks, mothers receive 75–100 percent of pay (Britain, Cyprus, Greece, Portugal, Italy, and Sweden are the only ones without full reimbursement). Although the employer pays a majority of the upfront costs in most countries, companies enjoy 90–100 percent reimbursements from the government. The Scandinavian states and France also guarantee paid paternity leave, as well as additional unpaid maternity leave, with guaranteed job protection. Germany even has a “parents pay” to mothers of newborns who continue working so they can afford child care while pursuing their careers. Tax payers end up paying, but there are also several benefits to maternity leave. There is the economic stimulus of increased demands for products ranging from diapers to clothing and food. Employers can also temporarily reduce their payroll (saving money) without losing valuable staff. Furthermore, there are clearly social benefits


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when individuals can spend more time with their families, a problem prevalent in all fast-paced developed countries.

Unemployment Compensation and Job Training You generally find more generous unemployment pay the farther north in Europe you go. Unemployed Danes receive 90 percent of their last 3 months average earnings; in The Netherlands it is 70 percent of one’s last wage, 80 percent in Sweden, while laid-off German assembly workers gets approximately two-thirds of their annual net earnings up to salaries of $80,000. A Frenchman or Greek has to work four months to receive unemployment benefits if they lose their job. In the Netherlands and Sweden, it is six months; ten in Belgium and Ireland. Countries such as Austria, Denmark, Germany, Italy, and Portugal impose a qualifying period similar to Spain’s, where it is 12 months. An American would in fact recognize many of the systems in southern Europe, where only 6 of 10 unemployed workers qualify for benefits, which then average 60 percent of previous income. Unlike the ease with which American and Danish private sector employers can hire and fire staff, rigid Spanish, Portuguese, and Italian labor laws and costly dismissal regulations account for the high rates of temporary employment and short-term contracts (with high employee turnover), making it particularly hard for young people to accumulate 12 months’ employment. Furthermore, temporary workers also earn less while they are working, leaving them more reliant on family and nongovernment charities rather than government aid, much like their American peers.10 As part of welfare reforms, European states have cut benefits to ensure that it pays more to work than to be on assistance. For example, in 2008 Italy followed Sweden’s example from the previous decade, clarifying that public employee career advancement will depend on productivity rather than seniority, and that employees can be dismissed for lying or refusing transfers.11 Under Denmark’s “flexicurity” other social assistance (e.g., housing subsidies, child care) cannot exceed 80 percent of unemployment pay (which is also limited to 4 years in a 6-year period).12 Unemployed people receive education or job training for up to 6 weeks during the first 12 months of unemployment (6 months in the case of young people), and individuals have to post their resumes on Web-based job banks. This model, just initiated in Britain in 2009, dramatically lowered unemployment and decreased social dependency. Others have part-time and short-time work schemes, which include a process where for 12–24 months, the government covers most of

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the lost wages when employers cut employee work hours. This helped hundreds of thousands of German workers through the 2008–2009 recession, while saving employers from costly rehiring and retraining expenses in the succeeding economic upturn (rehiring and retraining is far costlier—I can attest to this having run a restaurant). Several other countries have similar programs to help companies weather economic storms and enable employee retraining.13 Interestingly, a 2005 study on Germany, a country that has undertaken impressive reforms since 2002 to lower costs, argues that lowering unemployment compensation actually has some unintended negative effects. It promotes overeducation (forcing jobseekers to assume jobs for which they are overqualified) thereby increasing mismatches on the labor market, while leaving less educated behind.14 Another problem may be more challenging. Labor and health care reforms notwithstanding, part of the explanation for northern Europe’s low unemployment figures lies in the swelling ranks of people on sick leave and disability, many of whom are neither sick nor disabled. Streamlined processes and fewer benefits have done little to curb this trend, with the worst being Ireland, the Netherlands, and the Nordic countries, all of whom spend twice the international average on these benefits. In Finland, disability is mainly used as a substitute for early retirement, with most new recipients being older than 50. There are clearly huge problems when disability substitutes for retraining and employment, and the potential economic and social risks (skyrocketing costs, loss of productivity, social isolation) leave little doubt that this is an area where future reforms are essential.

Pensions A wonderful result of prosperity and innovation is that we keep living longer, and regardless of our current age, we all want to retire well, to enjoy the “good life” when we retire. How to best provide for a decent standard for the elderly is one of the largest problems facing Europe. Though enjoying longer and healthier lives, most countries’ retirement age remains the same as 30 or 50 years ago, placing huge burdens on national budgets. So how are the European elders fairing? For a full public pension, you need between 25 (Poland) and 40 years (France and Sweden) of fulltime work; shorter periods mean proportionally reduced pensions.15 Many countries either have raised (e.g., Germany from 65 to 67, Cyprus from 60 to 63, Poland and Hungary to 65) or are in the difficult process of raising (Italy, Sweden) the retirement age and more will follow before 2015.


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Even if the recalcitrant Italians have finally realized that it is unsustainable to have people retiring at age 55, they now have to labor an additional 6 years beginning in 2013, only a combination of more labor and love will help save a shrinking nation.16 France, Britain, Italy, and Germany used to allow women to retire earlier than men, but improved life expectancy and rulings by the European Court of Justice (ECJ) on equality in private and public pensions have forced an equalizing of retirement age (enforced by 2016–2017). Some countries, such as Belgium, Portugal, and Ireland, have public defined-benefits systems. Here your pension is based on a set formula, usually a percentage of your average income from your top five to fifteen earning years. Like in the United States, these systems are largely unfunded, so-called pay-as-you-go, requiring many active workers, all paying into the system to keep it sustainable. Italy, Hungary, Poland, Romania, Sweden, and Slovakia now have mixed systems where workers contribute of their income (varying from 9 to 18 percent) to the general pension fund used to pay current retirees, and a smaller sum goes into individual accounts that are then adjusted for inflation and economic growth when paid out. Some European countries have thus managed what former President George W. Bush failed do in the United States, and in fact privatize parts of social security. Every country across Europe has some form of minimum guaranteed pension that equates to approximately a quarter of the average (median) national income, and retirees with minimum pensions also receive housing assistance. Overall most retirees receive approximately two-thirds of their former wages, with Austrian pensioners having it especially good: they receive 80 percent of their previous income.17 None of the aforementioned is radically different from the United States where public retirement is 66 years of age (rising to 67), and you need 35 years for full social security—even if it pays comparatively less per person than in Europe. France and Denmark also mandate occupational (private) insurance to compliment state pensions, while in countries with defined benefits additional insurance is voluntary. Across the continent people increasingly have supplementary private pension schemes, much like half of working Americans who save in private 401-K or similar pension plans. Pension funds are more strictly regulated than other investments, allowing less speculation, and the funds have regular cash flows from contributors (employers and employees). Several countries, including Germany, Sweden, and Britain also guarantee most benefits if a private company goes bankrupt. Except for Denmark (which has indexed pension age to rising life expectancy), European pension systems need further reforms to support an aging population. One study found that if all of Europe wants to maintain the same level of benefits in 2050 as in 1995, retirement age would

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have to average 76 years (and 74 in the United States).18 Thanks to higher birth rates and sustained immigration, the United States is in better shape to face this challenge. Although an estimated quarter of all Europeans will be more than 65 by 2030, the figure for the United States is 20 percent, and with more people working.

Poverty All social programs, benefits, and services are in some way intended to enhance social and individual well-being. Even by strict American standards, let alone more generous European standards, poverty is lower in Europe and much lower in the western part than in the United States. Applying a threshold of earning less than half of a country’s median income to serve a family of 4, poverty rates are 9–10 percent across most of Europe, compared to 16–17 percent in the United States (24 percent for blacks).19 According to World Bank figures—and contrary to what many American talk-show hosts assert—poor Americans are no better off than mainstream families in many Eastern European countries, such as Slovakia and Hungary. There are certainly pockets of higher poverty in eastern parts of Bulgaria, Romania, parts of Poland, Slovakia, and the Baltic States; southern Italy, southwestern Portugal, and northeastern England, but even in these regions, social assistance leaves people with better purchasing power parity (a comparison of how much people in a country can buy with their money) than their American peers. Poverty rates in Mississippi and Louisiana hover around 20 percent, with some counties at 50, higher than the worst areas of Italy or Latvia. The European Union’s (EU) Social Fund Table 6.1

Government should care about the poor

Government Sweden Britain United Germany Italy Czech Poland & should care Ststes & Republic Bulgaria for the poor, Spain % who agree 86

91

70

92

86

88

88

Sources: Exact statement: “It is the responsibility of the (state or government) to take care of very poor people who cannot take care of themselves.” “World Publics Welcome Trade – But Not Immigration,” October 4, 2007, Pew Research Center’s Global Attitudes Project. It is very difficult to accurately compare European poverty to American. In Europe you are poor if earning less than 60 percent of median income, meaning below $26,000, while in the US that would be $27,000, implying a third of Americans are in poverty. The US instead uses a set number, in 2007 it was $21,000 for a family of four. US Census Bureau, “Current Population Survey,” 2007, http://www.census.gov/hhes/www/macro/032008/pov/new46_001_100125.htm.


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provides money for projects focusing on adaptability of workers and enterprises, access to employment and labor force participation, social inclusion, and partnerships for new jobs, but poverty, especially in Eastern Europe, remains a problem requiring more investments, education, and jobs for the long-term. As seen in table 6.1 most Europeans believe government, more than private interests, has a responsibility to address such issues.

Education Primary and secondary education is publicly funded throughout Europe, and many European countries rank among the world’s best as measured by international tests.20 A third of students in the College Survey 2009 also believe European primary education is better than American, and evidence is perhaps most glaring in Finland; Finnish teenagers have earned top scores among 15-year-old students since the mid-1990s.21 Finnish youth also like to waste hours online, “dye their hair, love sarcasm and listen to rap and heavy metal. But by ninth grade they’re way ahead in math, science and reading—on track to keeping Finns among the world’s most productive workers.” The secret? Discipline in the class, extensive freedom for teachers to set the curriculum, and an emphasis on the basics (math, reading). America? Look in the middle of the pack of 57 countries, this even as educators pile on more homework, standards, and rules. Thousands of educators from around the world, including the US Department of Education have visited Finland to learn how the Finns do so well. Jorma Ollila, chairman of Nokia and Royal Dutch Shell, adds another piece of the puzzle: income does not matter, “Everybody can get a good education no matter what your background is.”22 Yet, public funding does not necessarily equal public schooling. Belgium, Ireland, the Netherlands, and Sweden decentralized education, and implemented versions of government sponsored school vouchers. A 16 percent of Swedish students now attend private schools; government spends less money on education, and test scores in public schools improved thanks to competition. The real kicker: while private schools have increased in numbers, low income Swedes choose independent schools in greater numbers than richer Swedes.23 In the Netherlands, 70–80 percent attend private schools, with government funding following the child and equaling that which goes to public institutions; Poland is considering a similar policy. In Ireland, Britain and France schools compete and parents are allowed to send their children to schools outside their residential districts, thereby, in practice, resulting in more public money going institutions deemed successful by students and parents.

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In regard to higher education, the picture differs. Although cheap by American standards, most countries do charge for university education. Belgian, Dutch, Irish, Italian, and many German universities now charge nominal fees of €500–1,000 ($ 660–$1,400), with British students paying approximately ₤3,000 ($5,000). In France higher education is nearly free, but for the few elite schools who groom most civil servants, including future politicians, there is no selection process. Under EU citizenship rules and a European wide university exchange program, college students can now also study anywhere in Europe and pay national fees, so a Spaniard studying in Brussels pays the same fee as a Belgian citizen. This will, over time, act to further harmonize educational felicities’ rates. Education and science are areas where the EU’s role is limited to supporting national governments. European governments voluntarily agreed to harmonize educational degrees along Bachelors (three years), Masters (five years), and Doctorate (minimum seven years) and mutually recognize degrees from across Europe (the so-called Bologna Process). Reforming curricula has come farthest in smaller countries, while the larger lag behind, especially France, and legal degrees are not part of the harmonization of degrees.24 It is too early to assess the long-term effects of charging fees on quality and enrollment. As of 2008 more 25–34-year-old northernEuropeans finish high school and a higher percentage of the same age group graduate college, than do their American peers. According to the US Census bureau (2006), less than one-third of Americans have a college diploma, on par with the laggards in southern Europe (e.g., Italy, Spain, Greece). One result of European education reforms is that some countries’ universities (Germany, Sweden) now have to compete for research funding through performance indicators and some have become semiprivate, allowing them to pay competitive salaries, and attract more private funding. In the long-term this may also help raise funds to bring scholarship opportunities in line with those in America.

Public Opinion We like to argue that we live under “free market capitalism,” but it appears that Europeans as much as Americans realize the fallacy of such puritanical beliefs. We live in mixed economies, with different scopes of social assistance programs and different private-public realms of responsibility, and it seems Europeans are increasingly assuming a slightly more skeptical view of government, as indicated in table 6.2. When, in the 2009 EU elections, voters handed Germany’s Social Democratic


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party (Europe’s largest) its worst election result ever, primarily because the party supported using tax-payer money to bailout big business, and the leader of this party courts a federation of entrepreneurs for support, eyebrows are raised. When the French president says new taxes will hurt rather than help the economy, and when the Latvian prime minister says enduring painful cuts is necessary because without fiscal responsibility the country will suffer even more, you know things have changed. These are actions and statements normally expected from American conservatives. But these European sentiments have been rising over the past decade. In tandem with reform of public services, Europeans are expressing limits on what they believe government should do. It is a chicken-oregg question whether government reforms and the public responds, or whether the public drives reforms, suffice to say it is always a bit of both. Nonetheless, support for free markets is almost as high in Europe as in the United States, and as many Europeans as Americans believe government is Table 6.2 Country

Britain Czech Republic France Germany Italy Poland Slovakia Spain Sweden United States

Public opinion on freedom and liberty In your own life what is most important to Government Better you controls off under of the following too much capitalism of our lives Freedom Freedom Freedom Freedom of religion from poverty from of % of and hunger crime and speech population violence 7 4

40 38

33 40

18 16

64 55

72 59

4 6 12 12 5 4 4 28

56 30 18 44 42 44 41 22

17 26 27 21 33 17 28 28

24 36 39 21 18 34 24 22

65 74 73 49 52 71 61 65

53 65 73 68 53 77 71 70

Source: “World Publics Welcome Trade – But Not Immigration,” October 4, 2007, Research Center’s Global Attitudes Project. Exact statements: “Government controls too much of our daily lives,” percent of people who completely and mostly agree combined and “Most people are better off in a free market even though some people are rich and some are poor,” completely and mostly agree combined.

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too intrusive. Furthermore, while majorities of Spaniards (69 percent) and Italians (51 percent) say government should have the main responsibility for providing people with a secure income, approximately half of the French, British, and Germans share Americans’ beliefs that government, employers, and individuals all have equal responsibility.25 Other surveys show similar results, with more Europeans believing government should provide decent housing and work to equalize income; while expressing similar levels of general trust in government, and, surprisingly, the same levels of support for protecting freedom of speech as Americans. So it appears Europeans are moving a bit in the direction of Americans’ traditional views on capitalism, the role of government, and the responsibility of individuals.

Not So Certain Conclusions European states are generally less “welfarish” than most Americans believe (presidents are not the only ones who can invent new words, social scientists do it all the time), and reforms have certainly incentivized work and lowered social benefits. Even the welfare systems most pundits have long touted as most extensive have changed. Both France and Sweden have dramatically cut eligibility and reimbursements across a number of social programs. Nonetheless, European systems remain generous to people who are sick, pregnant, in an accident, unemployed, of college age, or retired; and Europeans are proud of this. Believing that access to basic education, good health care, and a decent pension are rights, not privileges, is part what it means to be European. Europeans of all national and party-affiliations share some common convictions of what society should provide its citizens and remain overwhelmingly supportive of a core aspect of the welfare system, which has been the subject of more myths and misperceptions in America, than almost any other health care system.

European Health Care Is Socialist, Expensive, and Offers No Choice of Doctors. Wrong, Wrong, Wrong Variations A one-tier system is tyranny, one payer system is socialist and everyone falls through the cracks.


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Doctors cannot give the right treatment or prescription because government won’t let them. [t]hey don’t have to pay for their own health care . . . socialized health care is not free. Taxes will undoubtedly rise to an almost non-affordable rate for most . . . treatment on potentially life-threatening illnesses such as Cancer. The results may scare you to death.26

This is one of the most enduring yet erroneous myths of Europe. An ideological reason for much of the ignorance of how European care actually works, lies with the previously noted general suspicion of government and the fact that, unlike Europeans, most Americans have traditionally seen health care as a privilege, not a right, a product or service to be bought like a TV, pension, or financial advice. From talk radio, and much of the blogosphere, one easily gets the impression that every Canadian, and increasingly Brits and other nationalities, have no choice of doctors or care, are misdiagnosed, ill-treated, and left to suffer. Setting aside the Canadian system, when was the last time you heard of a lifesaving, cutting-edge brain surgery on an ordinary middle-class Dutch, French, or Swedish citizen? How about laparoscopic rather than open-heart surgery on a low-income Finnish clerk? A new prosthetic arm with real nerve functions in Britain? How about thousands of annual American surgical mistakes, misdiagnoses, or incorrect treatments? While I was conducting interviews in Europe in May 2009, a story broke in New York regarding two top American neurosurgeons who, on numerous occasions, failed to show up for surgery.27 No system is perfect, but it is safe to say had the neurosurgeons been British, French, or Swedish, American headlines would have read something along the line of “failing socialist health care systems.” Before discussing the actuality of European health care, it is appropriate to disclose here what I have publicly stated and written elsewhere on this very controversial issue. I do not believe government has a moral obligation to provide health care for all. The conservative president of Switzerland, a country which up to 1994 had the same system as the United States, is representative of all Europeans when he calls health care simply “a human right”; private industry has a natural role to play, but health care cannot be left completely to the market.28 I consistently refuse to engage in a debate premised on morality. I am unable to think of a single vital political issue won solely on a moral basis absent an economic rationale. Even so, we all need our health to function. Even if you make it healthily to 60 years without ever seeing a doctor, you are virtually guaranteed to have bought aspirin, cough drops, sinus spray, or any of the thousands of other drugs that help keep us going. Put simply, without our health we are unable to work, produce, and

Table 6.3 Country

Finland Netherlands Poland Sweden Germany France EU-5 United States

Health data Life expectancy HCSGDP

79.5 79.7 76.3 80.8 81 82 80.4 78

8.2 9.8 6.4 9.1 10.4 11 9.6 16

HCSPP$

2,840 3,837 1,035 3,323 3,588 3,601 3,304 7,299

Practicing physicians per 1,000 people 2.95 3.93 2.2 3.6 3.37 3.4 3.3 2.43

Hospital beds per 1,000 people

6.7 4.5 6.4 n.a. 8.2 7.1 5.2 3.1

Deaths per 100,000 people from Heart attack

59 36 49 52 44a 19a 33.5a 38a

Diabetes

Cancer

6 13 12.7 11.2 10.4a 14a 12.4 20.3a

132 175 198 146 156a 162a 160 158a

Note: All data 2007 unless otherwise noted. a 2006 HCSGDP: Healthcare spending as a percent of gross domestic product HCSPP$: Healthcare spending per person, US dollar equivalent Sources: OECD Health Data 2009, www.oecd.org/health/healthdata; European Commission, Living conditions in Europe 2003-2006 (Luxembourg: Eurostat, 2008); European Commission, “Health EU, The Public Health Portal of the EU,” http://ec.europa.eu/healtheu/health_in_the_eu/ec_health_indicators/index_en.htm.


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enjoy life. The point of this section is to look at the empirical evidence of available coverage, health results, consumer choice, and economic facts (efficiency), not to invoke to analyze any moral arguments. Note also that when explaining the European health systems, the term universal—not socialized—health care is used, since universal refers to something all-inclusive, in this case all people. Socialism implies no private input, and every country in Europe has varying degrees of private sector participation in their health care systems. Let us now examine all this closer.

Quality and Health Indicators A syndicated columnist argued in a widely disseminated article that overweight Brits were denied hip and knee surgeries due to obesity. Presenting this as “fact,” he, like many other American commentators making similar arguments, failed to clarify that what he was referring to were policy guidelines to improve preventive care, in essence encouragements to seek other, less invasive procedures before surgery.29 The British health authority noted, “Patients will be assessed according to their clinical needs, as is the norm, and if necessary advised to lose weight before treatment, which will reduce the risks and improve outcomes for surgery. The message is that patients who need clinical treatment will get it.”30 This is actually little different from the situation in the United States. The American National Institutes of Health identifies obesity as a risk factor when undergoing surgery, and one study showed significantly worse outcomes in knee surgeries on obese patients.31 A 2008 research paper cited several studies showing that obesity, drinking, and smoking “pose a high risk factor for very serious illnesses . . . Obesity accounts for a 35% increase in service expenses and a 75% increase in medication expenses . . . [and] Individual behaviors and environmental factors account for nearly 70% of all premature deaths in the United States.”32 American insurance companies use such statistics to either deny the obese, and smokers, coverage or charge them unaffordable rates for insurance coverage. The cost and quality of care are the two critical elements of any system, and Europeans neither accept reckless spending to achieve quality, nor do they deny treatment to save money. The data shows Europeans enjoy healthier lives than most, with good cancer treatment, available transplants and other surgical procedures, and longer life expectancy than Americans (see table 6.3). Indicators not included, such as infant mortality rates, heart disease, or healthy years show similar trends, as do survival rates, rather than deaths, from the illnesses listed.33 Spending 50 percent more than any other

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country simply does not result in a healthier American population; it does not yield better diagnosis, access to treatment, or survival rates. Numerous studies also show Europeans to be largely satisfied with their care.34 The British system of preventive care is ranked the best in the world by the World Health Organization (WHO), and doctors get premiums for keeping their patients healthy; these bonuses can amount to doubling their salary, putting them at or above the pay range of most American primary care providers.35 American health maintenance organizations (HMO) would love that.

Cost President Obama’s 2009 reference to FOX as “one television station that is entirely devoted to attacking my administration” is just as off beam as arguments by the far-right that universal health care must, by default, cost more than the hodge-podge, bureaucratic nightmare that constitutes the US health care delivery system in 2009.36 Private and public sectors work together to provide universal coverage and care at lower cost than in America. As seen in table 6.3, the United States spends 16 percent of gross domestic product (GDP) on health care; all European countries spend 40–60 percent less on health care (this includes public and private spending), yet have better statistics in almost every measurable area, and cover everyone rather than the 80 percent insured in America.37 Even setting aside private spending, more American tax dollars are spent, per person, by the government, on health care for seniors (Medicare), the poor (Medicaid), federal employees, and war veterans, than under any other countries’ government run system.38 Furthermore, no one in Europe goes bankrupt because they are unable to pay medical bills, while seven out of ten personal bankruptcies in the United States are due to medical bills.39 Since 1999, health care costs in Europe have risen significantly less than in the home of the liberty bell, and in Germany (with all private providers) spending increased less than half of European averages.40 While Europe projects a 12 percent increase in health care expenditures until 2050, the equivalent projection for the United States is a 50 percent (absent reform). A mix of regulations and incentives makes universal coverage economically viable, but three features apply throughout Europe. First, every citizen has to contribute (through taxes or insurance), and the government subsidizes the poorest. Second, no one can be denied coverage. Third, the main medical providers in any given country (the insurance companies, regions, or the national government, depending on the particular country), can all negotiate in blocks with drug companies, thereby lowering the cost of drugs. Think drug companies cannot survive? Five out the


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top seven pharmaceutical companies globally are European. Do restrictions on pharmaceuticals limit innovation? Not really. Among thousands of fantastic medical equipment, procedures, and drugs invented abroad, we find artificial hips or shoulders invented in France, x-rays (Germany), heart transplants (Sweden), and Viagra (Britain). There are two basic systems of payments and delivery. In national health systems (NHS) funded by taxation, care is either completely free, or carries a small co-pay, at the point of delivery. This model exists, in for example Britain, Italy, Spain, Denmark, and Sweden. Doctors can still open private practices, and complementary private insurance covers cosmetic and supplemental care (e.g., a private room instead of a double). The second system is financed by insurance premiums, where some public, but mostly private physicians, hospitals, and insurance companies compete with each other for customers . Insurance companies must be not-for-profit (i.e., profits are used to pursue normal business activities rather than distribute payments to share holders), just as Blue-Cross/Blue-Shield in Pennsylvania is notfor-profit and had a $6 billion dollar surplus in 2007. Austria, Belgium, the Czech Republic, Luxembourg, France, Germany, the Netherlands, Poland, and Slovenia are some of the countries in this category. In addition, two features enable doctors to live well even as the average nominal salaries are lower than in the United States. First, medical school is inexpensive throughout Europe for those who qualify, so doctors do not enter their profession burdened with massive debt (more than $100,000 is not unusual in the United States). Second, in a culture generally dismissive of fraudulent lawsuits, there are extensive legal restrictions (tort) on malpractice suits, resulting in dramatically lower insurance costs. The latter run approximately $1,600 annually in Germany, while American doctors pay 10 to 50 times more (the highest in states that lack tort reform, such as Pennsylvania). The European systems incentivize people to enter the medical field and help explain why there are more physicians and hospital beds in Europe (see table 6.3). Alright, so effectiveness and accountability are emphasized from Sweden to Spain, Ireland, to Finland. But surely, you ask, these cost savings and restrictions on the health care industry must diminish patient choice? Think again.

Choice In one of many similar statements by policy makers and commentators alike in the 2009 health care debate, a caller to one of America’s top radio talk shows stated, in all seriousness, that he believed government run health

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care would mean his every choice, including foods, would be dictated.41 This is certainly not the case in Europe, where a mix of private and public health care providers and European patients, not grey-suited bureaucrats, choose treatments. Most countries allow citizens direct access to specialists (as with many American plans), while others (Sweden, Britain) have gate-keepers, that is, they require you see a primary care physician or family doctor first, similar to American HMOs. An American I interviewed in Paris in 2009 raved about the care she received when falling ill.42 The private doctor made a house call and followed up two days later. A friend of mine, a Los Angeles waitress, moved to Oslo and chose which doctors to provide full care for her and her three children and now does not want to leave. The ECJ has also ruled that health care is a service, and since services are to flow freely across European borders, health care must be accessible to all European citizens regardless of where they live and work.43 There is now a European health insurance card that allows citizens who are insured through their NHS to access to health care in another country when traveling, studying, or working.

Waiting Times How about waiting times? The excruciating wait in countries with universal coverage is said to be literally killing people. It turns out that based on the existing, but rather limited empirical (verifiable) data, an insured American’s wait is no shorter to see a doctor for knee or hip pain, a suspicious mole, or a breast cancer screening.44 Business Week reported on a 2004 study that found the waiting time in Boston for a dermatologist to be 73 days; to see an orthopedic surgeon in Los Angles would take 43 days. Germany and Switzerland have brief waits for screening and no waiting periods for hip replacements. A Dane’s wait for hip replacement is between 4 and 8 weeks, in Sweden it is 90 days, and in Britain the wait is now down to 11 weeks. Several countries have successfully created incentives for counties, insurance companies, and doctors to cut waiting times.45 For Belgium, the WHO reported “Patients do not usually have to wait long, if at all, for access either to general practitioners or specialists” and in Germany “Waiting lists and explicit rationing decisions are virtually unknown.”46 The Swedish regional authorities (who run their health care) incentivized hospitals and doctors by linking funding to shorter waiting lists, and within a year waiting lists were cut by two-thirds. Waiting times for common procedures are now on par with American. As an EU citizen,


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and even if your wait is within nationally accepted guidelines, you can go abroad for treatment if deemed necessary by your doctor. EU states have to pay for a Hungarian national receiving surgery while working in Estonia, or a British citizen going to a Spanish hospital for hip surgery because there is a shorter waiting period. This would be like your sister in Arizona going to Iowa (ranked the top American state for children’s health care) for treatment.47

Countries France, recognized as having the highest overall quality of care in the world, has much greater competition in the health care sector than you might think.48 All citizens are required to pay into basic national insurance, which covers 85 percent of patients’ medical costs. To cover the remaining costs, nearly everyone carries a complementary private insurance. All citizens carry a credit-card sized personal card with their health data, which has replaced all paper shuffling; bills are directly paid by the insurance. Administrative costs are 3 percent, one-sixth of the cost in the United States. Doctors and hospitals are private; they can set up a practice wherever they want, and you do not have to see a general practitioner before visiting a specialist. Co-pays range from 10 to 40 percent of costs for doctor visits and prescriptions, thus discouraging overuse and abuse of the system. Waiting times equal those in America, health indicators are better, and it all costs roughly 65 cents on the dollar compared to the United States. In Sweden, in addition to the general public fund that works as in France, an increasing number of Swedish workers now have companybased preventive and rehabilitation insurance plans; companies enjoy tax deductions for the cost of providing care and can charge employees a minimal sum for these services. The growing private health care market, including private doctors and care centers, resembles the US system but for the fact that, as in all other European countries, no one can be denied coverage, and health insurance providers must be not-for-profit. Administrative costs are a quarter of those in the United States. Waiting times varying by procedure, but are generally about the same as in France, and the cost is half of America’s. Germany has a social insurance system (like the Netherland and Belgium). People earning up to €4,000 ($5,500) per month are required to purchase insurance from any of 240 not-for-profit, insurance funds (called “sickness” funds) which combined cover more than 90 percent of

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all citizens (civil servants and the self-employed can buy from other private carriers). Monthly family premiums are equivalent to 12 percent of income, with the employer paying half of the amount. If you are poor or lose your job, the government covers the cost, and there are no deductibles on any plans. Insurance companies negotiate rates with groups of private doctors, and patients can switch doctors and insurers if dissatisfied, so there is competition on both price and service. Providers, doctors, hospitals, and insurance companies are private, there are short to no waiting times to see a specialist, and you stay with private plans even in retirement (the same applies in the Netherlands and Switzerland). The independent minded, and extremely federalist Swiss—Swiss Cantons, or regions, have far more autonomy than American states—used to have America’s market-based system. In the early 1990s, skyrocketing costs led to huge declines in coverage, with predictable increases in illnesses and drops in productivity. This fiercely capitalist and entrepreneurial people, who consider themselves as exceptional as Americans, voted in a hugely contested referendum to implement universal coverage. Insurance companies and pharmaceuticals insisted they would perish, and the vote passed by the narrowest of margins in 1994. Today a Swiss cannot be denied coverage because of preexisting conditions, and insurance companies are banned from profiting on basic care (they can profit from extra care such as single rooms or faster reimbursements). Monthly premiums are 10–13 percent of income (approximately $700 per family in 2008), and a doctor’s visit requires a 10 percent co-pay. Drug prices are low since insurers can negotiate as a block with pharmaceutical companies. How about the country’s giant multinational pharmaceutical companies? They survived and thrived; several of the world’s top 10 companies are Swiss. Waiting times are nearly nonexistent and administrative costs are 3–4 percent. The British model is funded entirely through taxes. Supplemental insurance is available for elective procedures and is held by 10 percent of Brits. This figure remains unchanged since 2000, so people appear satisfied with the national system. The NHS has steadily evolved from a centrally controlled organization, toward local autonomy and increased consumer choice (people can now choose their hospital). Regional entities purchase services for patients from competing providers, thereby increasing quality and improving efficiency, a reform that by mid-2009 received fair-to-good marks.49 Doctors and hospitals remain public, but compete through quality of service for patients. All Brits must see a general practitioner for a referral to a specialist, and physicians are keen on preventive care since they get hefty bonuses if patients stay healthy. There are no premiums or co-pays for doctor visits, but prescriptions require a small co-pay. Waiting lists exist for certain procedures such as hip or knee replacements, but have


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been shortened by 40 percent since 2006, and administrative costs are half of those in the United States. The British largely like their NHS, and reacted when it was used by conservative groups in America as an example of a decrepit, socialist, and insolvent system that left people suffering.50 The front page of the Financial Times, August 15, 2009 (“UK defends its healthcare”) told of thousands of Brits, as well as the leaders of the two largest parties (who both have children with severe illnesses), defending the quality of the NHS against hundreds of attacks in the American media by groups opposed to a publicly run insurance option, groups citing the “horrors” of the British system. In the Czech Republic, care is provided on the basis of a compulsory public insurance scheme, without co-payments, complemented by a private insurance market. Consumers freely choose health insurers and share premiums with the employer and the government. As in Sweden, many Czech employers have preventive care facilities providing basic service. Every Czech citizen must register with a primary care physician (as in Britain), but anyone can see a specialist without a referral, and most hospitals and beds are private. With one of the highest ratios of doctors and hospitals beds per patient in the world, short waiting lists, low administrative costs, and low overall health care costs, the Czechs are doing well. It is estimated that they need to increase national spending by one percentage point to sustain the system up to 2050.51 There are likely plenty of Americans wishing we were in the Czechs’ position!

Concluding Thoughts Some European countries have problems with waiting lists and staff shortages, others have plenty of doctors and no wait for procedures, but all international statistics, studies, and assessments show that the European systems produce impressive health statistics, with plenty of consumer choice, and at lower cost than in the United States. This is achieved through specific limitations placed on all parties involved.52 The moral arguments made by the American political left, who believe implementing universal coverage is a human right and that it solves all ills, overlook the legal changes required, including tort reform, which was never part of the democratic-sponsored proposals in 2009 (the national bar association is a huge contributor to the Democratic party). American conservatives who argue that universal coverage is too expensive, or that it denies choice, oppose European-style limits placed on insurance companies or provisions mandating insurance

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coverage. Nevertheless, and though not stated as such, many of the proposals floated by Republicans and Democrats in the 2009 American health care debate are in some way represented in Europe. The main Republican proposals of allowing small businesses and groups of individuals to join up and purchase insurance across state lines is in place in Germany, the Netherlands, and Belgium. So are the tort reforms the conservatives called for, but Democrats opposed. The much touted publicly funded insurance option exists as the default insurer if unemployed or poor in European countries where only private insurers otherwise compete (e.g., Germany, the Netherlands, or Belgium). It should surprise no one that American and international organizations, as well as many American citizens, rate the US health care system as poor; there is great medicine and fantastic technology, but the system is hugely inefficient, and with that, outrageously expensive. When reading this it is possible that America has reformed its system. If so, it can only help the many companies and hospitals verging on bankruptcy due to skyrocketing costs, and the many American businesses, more vocal than ever in support of a reform in 2009, who have for decades suffered a vast competitive disadvantage internationally due to rising health care costs for their employees. An April 2009 poll actually showed a majority of Americans willing to pay higher taxes if it leads to universal coverage.53 Polls aside, if reform passed, you can compare its components to those in place throughout Europe.

Europeans Are More Secular than Americans. OK, But Religion Still Matters More than You May Think Variations they’re post-Christian so they don’t go to church. it’s Europeans who are naive, superficial and materialistic.54

There appears to be plenty to support such perceptions. Less than one in five Europeans regularly attend church; 20 percent of French citizens consider themselves atheists, and people in Spain and Germany evenly split when asked whether they consider faith important.55 The Anglican Church of England is struggling to fill its pews, as are churches throughout Scandinavia and the Baltic states. The Catholic Irish, who went from rags


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in the 1970s to being one of the wealthiest people on the planet 30 years later, is also abandoning the church.56 Malta and Poland have the highest percentages of weekly churchgoers in Europe, with 75 and 60 percent respectively. Only a quarter of Europeans say religion influences their political choices, and less than half say religion affects their sexuality; even half the citizens of Roman Catholic Poland agree!57 Estonia has the fewest people who consider religion important to their lives, followed by other Protestant Scandinavians. Many other Europeans give religious freedom a very low priority compared to other issues (see table 6.4). By contrast, America is the most religious of all developed countries, with Mississippi being most devout state, and Vermont the least.58 The vast majority of Americans profess a belief in God, and few question mixing faith and politics, which is unthinkable across most of Europe. An eloquent American conservative writer argued, “Europeans are materialistic; the E.U. has a low profile on strategic issues because it was designed by bureaucrats obsessed with trade and money. Europeans care more than we do about physical pleasure; they traffic in titillation.”59 Even Muslims’ attention to religious practices declines once settled in Europe. A 15–20 percent do not practice Islam at all, and one-third fail to even observe Ramadan, where fasting is considered a duty.60 Have Europeans really lost their ways? Is their moral compass whacked? Further investigation reveals a slightly different picture. Church attendance is low in many regions (especially northern Europe), but 60 percent say they pray; the vast majority of Catholic dominated countries such as Greece, Romania, Malta, Portugal, Ireland, Italy, and Poland profess a belief in God.61 Most Europeans have few problems with contemporary religious activity.62 The Danes and the Finns, with some of the lowest levels of church attendance, express the highest trust in religious organizations. Swedes, with equally low attendance, express the lowest trust. Many German social assistance programs are largely administered through churches. While churches are closing and attendance is declining, the Christian Union in the Netherlands and Christian Democratic parties in Sweden and Germany are doing well. So, even with declining religious practices, trust in religious organizations is deeply embedded and independent of active church participation.63 Critics argue that acceptance of homosexual marriages in several European countries, the loosening of abortion rules in countries where, until a few years ago it was banned (Ireland, Spain), and the uptick in outof-wedlock births (especially in the north) are indicative of demoralized societies. Yet there are few signs of societal breakdown. Values of social justice and equality are securely anchored, belief in other people’s honesty remains higher than in America, and more than half of Europeans

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oppose abortion, even if a clear majority does not want to ban the procedure.64 The vast majority of European believe one can be moral without religion—even in Catholic dominated countries—while the opposite is true in the United States.65 Most Europeans reject human cloning to provide couples a baby even when one partner has a genetic disease, and more than half of those identifying as religious are hesitant to support research in, or new policies on, science and technology based primarily on a risk-benefit analysis; rather they, like many Americans argue for moral and ethical considerations on such issues. Huge majorities across Europe oppose legalizing marijuana, and, as discussed in the following text, citizens increasingly demand that immigrants integrate and assimilate into European culture and laws. Before continuing we must ask why Europeans are avoiding church? Why does material prosperity appear to have modified Europeans’, but not Americans’, perceived need for religion? Poverty may well increase belief in a higher power, either to help one out of trouble or to reach a better place in the afterlife. The American south is more religious than the north, and a similar pattern is evident in Europe, where the southern and poorer countries have the most religious people. Yet, studies in the United States show that the most religious people, and regular church goers, are wealthier than average.66 A better explanation may be social. The separation of church and state, enshrined in our constitution, was not an issue in most of Europe. In fact, many countries had until recently, and some still have, an official, statesponsored, church, which handles birth certificates, population records, and official ceremonies, such as monarchs’ weddings. In France, this was the Catholic Church, in Sweden, the Lutheran; both countries disjoined the government from any church in the 1960s and 1990s respectively. In Britain, the Anglican Church remains the official state church, and in Poland, it is the Catholic Church. The vast expansion of social welfare programs beginning in the 1950s, along with rapid and widely disseminated material well-being, and the nearly homogenous religious dominance of Christianity (mostly Protestantism and Catholicism, with minimal “competition” from Jews and Muslims), left little over which to argue until recent waves of immigration. Christianity in Europe has thus always been communal and public, reinforcing government programs, working as part of society and often pushing social reform. Compare this to the individualistic and private American version of Christianity, where individual redemption and salvation, rather than societal reform, is traditionally emphasized. Europeans reject the rugged individualism and public religious displays that Americans find natural, for example, prayers in Congress, God on currency, “God bless America” ending public speeches,


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and testimonies of religious convictions on the campaign trail. In other words, in America, an expressed religious belief is upheld as a badge of honor, as if to reinforce one’s moral and ethical qualities; in Europe, the church is just one part of society, and Europeans do not much care if political candidates are religious.

Europe Is Overrun with Immigrants. Not Really, But There Are Real Problems Variations burgeoning immigrant Muslim populations with little interest in assimilation appear poised to fill the population gap Europeans are creating. Someday soon you will wake up to the call to prayer from a muezzin. Europeans already are.67

Background The 1950s through early 1970s Europe saw annual growth of 3–4 percent, with unemployment hovering around 2–3 percent. (This is below what many economists consider full employment since people move, quit voluntarily, go back to school, move between jobs, and the like.) Rebuilding European infrastructure and factories required more workers than were available domestically in most countries. Britain, France, the Netherlands, and Belgium brought in workers from their ex-colonies. Several countries without colonial pasts, and thus a natural flow of immigration, brought in what they referred to as “guest workers,” who were supposed to leave within a few years. However, many ended up staying, for example, Turks in Austria and Germany, or Greeks and Slavs in Sweden. The workers arriving throughout the postwar construction boom, and their children thus constituted one source of immigration. The other was the continuous trickling in from the former French, Dutch, and British colonies, and these immigrants remained almost entirely in the three countries. Very few asylum seekers saw Europe as their first choice until the 1980s, when the Iraq-Iran war and famine in east Africa led hundreds of thousands to flee, with many ending up in Europe. Europe has since continued to be one of the two most desired regions—the United States being the other—for all groups of immigrants. Today more than 10 percent of the population in many European countries are immigrants, a figure that doubles when including anyone with

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at least one foreign born parent. Walking the streets of Paris, Brussels, Prague, or Stockholm is little different from Los Angeles or New York in terms of ethnic, racial, or cultural diversity. It is impossible today to identify anyone’s nationality by appearance alone, but English is nearly universal, making it easy to order a fantastic Yebeg Wot (an Ethiopian dish with lamb and ginger) in Brussels, or terrific Kabob in Frankfurt. In terms of religion among immigrants, Islam dominates, and Muslims today comprise 5 percent of Europe’s population (a number likely to rise in the next few decades). The social and cultural traditions stemming from Islam often differ from that of Christianity and have turned out to be a major source of contention.

Problems with Asylum Seekers According the United Nations High Commissioner for Refugees, more than 40,000 refugees arrived in European states in 2008. Unlike labor migrants, or those seeking family-reunification, people fleeing torture, and other oppression, are guaranteed under international law a proper investigation of their application, and expulsion before a decision is illegal. In addition, most countries have laws prohibiting the deportation of any refugees if they are believed to face torture, or death, in their native land. Yet upon arriving in Europe, applicants are left waiting for extended periods. Throughout Europe, there are hundreds of camps (of relatively decent standards by international comparison) with applicants awaiting decisions on whether they can stay. The difficulty lies in ascertaining the truth in asylum seekers’ claims, but the vast majority ultimately have their applications rejected and are returned to their country of origin.68 EU guidelines define how member countries grant asylum, and beginning in 2010 common standards and procedures outline how member states should return illegal third-country nationals. These include allowing the detention of undocumented migrants and failed asylum seekers, including unaccompanied children, for up to 18 months, and a ban on reentry for 5 years.69 Even so, many European countries have sought to stem the flow of asylum seekers. For example, in 2002 Denmark implemented strict new asylum laws, and the number of asylum seekers shrunk 75 percent over the following 4 years. The Netherlands imposed new immigration and asylum laws in 2004, in the process expelling more than 20,000 asylum seekers. The message about tougher application processes is getting out: asylum applications in Europe fell 60 percent between 1992 and 2006.70


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Illegal Immigration Similar to, and sometimes larger than, the flow of illegal migrants from Latin America into the United States via the southern border, southern Europe has borne the brunt of tens of thousands of Africans seeking a better life in Europe. “Entry ports” (Italy, Malta, Cyprus, and Spain) have difficulty patrolling their waters and have long complained about the social and financial burden immigrants pose. For example, 35,000 African migrants, most on rickety boats unfit for ocean travel, landed in Italy in 2008, sometimes carrying the corpses of those who perished at sea. Thousands of others land every year on Malta, the Canary Islands, or storm two Spanish enclaves in northern Morocco.71 People smuggling from the east is also a problem. These endeavors are often organized by the Russian, Chinese, or Italian mafia, not infrequently assisted by corrupt officials in the departure and—not uncommonly—destination countries. Individual country solutions in a union with common external borders and no internal border checks raises the old not-in-my-backyard (NIMBY) problem, where asylum seekers, smugglers, and groups of labor migrants “country-shop” for those with the least secure borders and least enforcement. Yet there is room for optimism. Historically, Europe has a pattern of realizing common problems, only to first have countries seek individual solutions. This period is followed by increased cooperation, harmonized policies, and eventually fully integrated EU-wide laws. Illegal immigration is heading down this path. There is now an EU border agency, Frontex, to which member countries contribute money and staff, and which works with national immigration authorities to stem the flow of refugees and illegal crossings. Frontex patrols the Mediterranean with vessels from numerous countries, including Germany, Sweden, Finland, as well as all the southern European states. The EU also has “return” agreements with many African and Middle Eastern countries who have to accept their nationals if found to be in the EU illegally. The EU has made several hundred million euros available for efforts to control illegal immigration from northern Africa and the Middle East, part of which is in an EU repatriation fund to help countries cover the costs of returning illegal aliens.72 There is also an EU Asylum assistance Office. However, legal requirement of transfers from the less-affected countries (e.g., Belgium, Denmark) or from those where immigrants may end up after the initial point of entry processing (e.g., France, Britain, Sweden) to the overburdened southern and eastern borders of the EU, looks unlikely until at least 2012.73

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Other Immigrants and How to Integrate New Residents Legal immigration poses other problems. The success of the EU has made it a magnet for immigration, but there are real problems of integrating those who have been awarded legal status. Immigrants, as well as those born to immigrant parents, suffer higher rates of unemployment than natives, and much higher unemployment than immigrants in the United States. Only half as many immigrants feel integrated in Europe compared to the United States, and a majority of French and German Muslims have stronger religious than national identities.74 The fact that many immigrants arrive from countries where sizeable portions of the population do not believe in democracy, for example Turkey, Bangladesh, Indonesia, and Pakistan, adds fuel to the suspicions of the one-third of citizens in the three largest European countries who believe Muslims are not loyal to their adoptive country.75 Combine this with decades of lax assimilation requirements in most European states and the result includes racism, workplace discrimination, and the radicalization of particularly Muslim youth, exemplified in, among other things, riots and homegrown terrorist groups. Let us begin by looking at one country affected more than most by immigration.

The New Country, or Not? Americans visiting any major Swedish city (summer time is gorgeous) could be forgiven for thinking they were in New York or Los Angeles as they stroll past a newly constructed Mosque, sip strong coffee in a trendy café packed with people of every skin color speaking dozens of different languages, or watch TV announcers wearing headscarves. From an immigrant population of 2 percent in 1979, one in seven inhabitants are now foreign born, and one in five Swedes have at least one immigrant parent. Sweden also had the world’s highest rate of naturalization in 2005. Some Swedish cities are 75 percent immigrants; certain suburbs of Gothenburg and Malmo (the second and third largest cities) have more than 90 percent immigrants, most stemming from the Middle East (Iran, Iraq, Turkey, northern Africa), and southeastern Europe (Sweden accepted huge numbers of refugees fleeing the 1990s civil wars in Bosnia-Herzegovina and Serbia). The result has been an uneasy, often controversial, and continuously problematic process of necessary social adaptation for Swedes and immigrants alike.


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I witnessed the blatant and indefensible racism that results from the lack of assimilation when I worked with and lived among large numbers of Iraqi and Iranian refugees, who, after fleeing the horrors of the 1980–1988 war between the two countries, found safety in this sparsely populated Nordic country. Befriending many, I listened to stories of unimaginable cruelty and torture from people with advanced science and medical degrees, who, rejected by most Swedish employers, found themselves flipping burgers or managing fruit stands. Some worked their way up to managerial positions (McDonald’s in Sweden pays well) but many remained—and still remain—in menial jobs, performing tasks far below their qualifications. Similar stories apply to Serbs and other immigrant groups. Once in Sweden, people who had fought each other only months earlier now found themselves living in the same city areas, even the same apartment buildings. As unemployment rose in the recession of 1992–1993, immigrants were blamed, and often attacked by Swedish gangs. Swedish and immigrant gangs (e.g., Slavs, Iraqis, Iranians, Russians) have since become a permanent feature of Swedish society. Yet Sweden continues to accept more immigrants (refugees and family reunification) per capita than any other European country. From 2006 to 2008 more Iraqis arrived here than in any other country (10 times the actual number accepted in the United States), this even though the Swedish government had opposed the 2003 invasion. Racism and welfare dependency among immigrants (nine times higher than among native born Swedes), social exclusion, crime, and 30–40 percent unemployment in many immigrant communities are the result of overly generous subsidies and botched policies. Through the end of the twentieth century, there were no restrictions on asylum seekers or family-reunification, and almost no requirements to integrate once granted permission to stay. For a country that traditionally prides itself on egalitarianism, of being the world’s “moral conscience” (though the Canadians also claim this title), such problems have transformed society. Sweden is now approaching immigration quite differently, requiring new residents to study Swedish, and their children to attend school. The government cut the generous financial assistance that upset normally calm Swedes. The Swedish Minister for Integration and Gender Equality, born in Burundi, explains that the newly arrived must do their part, “A lot of people misread their rights, . . . They think that freedom of religion means that they can do anything in the name of religion, or that human rights means that they can act however they want against others. If they want to live here, have kids, have grandchildren, they must make an effort to adapt to the society where they live.” 76 As one would expect, this, and other similar statements, stirred opposition among the

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half million Muslims in Sweden, but they also echoed similar statements heard throughout Europe. Then British Prime Minister Tony Blair made clear “coming to Britain is not a right, and even when people have come here, staying here carries with it a duty. That duty is to share and support the values that sustain the British way of life.” 77 Whether Sweden’s immigration related problems will be overcome (e.g., less racism and segregation, and improved labor productivity) remains an open question, but its economy is doing well and businesses are competitive, meaning at least the economic base is present to achieve a fully integrated society.

Larger Europe France’s social integration model is based on assimilation through French language and laws; egalitarianism under a strictly secular state without ethnic identification. It has failed. Suburban Paris suburbs, banlieues, are overwhelmingly inhabited by poor immigrants, suffering from high unemployment (up to 30 percent, not unlike some American urban ghettos), and general discrimination. French Muslim youths express dismay at their prospects and complain about blatant racism.78 The local police force has been abolished in many suburbs, replaced instead by “flying squadrons,” whose lack of permanency has diminished confidence in authorities, leading some observers to describe a state of warfare between the police and youth in the poor, multiracial suburbs.79 Violent protests, including fights, burnt cars, and clashes with police, have erupted numerous times over the past two decades, most recently in 2005 and 2007. Steiner and Crepaz describe how “a toxic brew of discrimination, bad schools, prejudice, lack of opportunity, poor housing in ethnic ghettos, poverty and hopelessness” finally exploded, and it should be added, might well again.80 President’s Sarkozy’s reference to rioters as scum and criminals did not help.81 Despite government rhetoric little has been done in terms of education or job training to address the underlying social problems, instead the focus remains on fighting crime.82 Unsurprisingly Britain has the largest percentage of immigrants from former colonies. Britain controlled almost half of the inhabited world in the late nineteenth century and remains a global power today. Millions of immigrants stem from India and Pakistan, and, as a global financial capitol, London is home to plenty of wealthy investors from around the world. Britain has ongoing problems with assimilation of mostly Muslim immigrants, exemplified in numerous riots in several cities in 2003–2007. Former as well as current British prime ministers, and many Muslim


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community leaders, support harsher laws to “weed out extremism.”83 Political leaders have charged there are too many immigrants, causing a heavy burden on social services, largely echoing the British public, many of whom perceive their jobs and identity to be threatened.84 Yet very little has been done short of harsher antiterrorism laws, again signaling that ultimately immigration must be decided at the EU level. But even such an approach highlights differences and problems. Racism and violence, lack of assimilation and respect, are an ever growing concern across Europe. European (and American) opinions about Muslims are considerably more negative than are their views of Jews, even if anti-Semitism is also on the rise. Half of Spanish and German respondents rate Muslims unfavorably, while opinions of Muslims are somewhat less negative in Poland (46 percent) and considerably less negative in France (38 percent); but overall negative views have trended upward in Europe.85 Rising anti-Semitism and anti-Muslim views are manifested in violent attacks on minorities and immigrants, now routine occurrences in Britain, Italy, Sweden, and even Poland, where Jews are feeling increasingly unsafe. A true sore spot on Europe’s conscience is the plight of the Roma (sometimes called gypsies). Already plagued by poverty, high unemployment, discrimination, and general public hostility across all countries, the continent’s most economically vulnerable population is frequently subject to physical attacks, including shootings and firebombings, mostly by skinheads and other far-right groups. Such occurrences are particularly prevalent where their numbers are large: Spain, France, Slovakia, Bulgaria, and Romania. The acts of virulently anti-immigrant groups spewing racial and ethnic hatred could be seen solely as a social problem; a problem requiring remedies, but isolated and unrepresentative of any larger following. However, the views, if not the violence, expressed by extreme groups seem to appeal a growing number of citizen. Since 2000 national elections have fanned extremist parties and candidates. In France, Jean Mari Le Pen was runner up for president in the 2002; in 2000 Austria’s Jörg Haider’s right-wing party entered government, only to have the rest of Europe boycott the Austrian government for 9 months, and the Sweden Democrats, a party with roots in an extreme-right movement in the 1980s, has more than 200 seats on local councils (2008). In the 2009 European parliamentary elections far-right, nationalist, antiminority parties won between 6 and 13 percent in France, Italy, Romania, and Austria; the Hungarian party Jobbik received nearly 15 percent support, and the Slovakia Nationalist party got 5 percent. Neither is it much better in Britain, where in 2009 a candidate convicted of inciting race hatred was elected to represent a district in Northern Ireland in the European Parliament.

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Action The question in Europe is how to address these parties, and the larger question of immigration. While social problems are evident in France and Sweden, their far-right parties’ appeal actually declined in popularity over the past decade, meanwhile new-nazi and terror-sponsoring groups seems to linger or grow in popularity elsewhere. So, is it best to follow the French and Swedish models of permitting these parties, keeping them above ground, and exposing their odious agendas through informed debate? Or is the Spanish and German approach of banning political parties that encourage hatred and incite violence preferable? There is little agreement other than combating extremism remains a large problem throughout Europe. In dealing with assimilation of immigrants housing segregation, more pronounced throughout European cities than American, has been touted as a major problem in helping immigrants assimilate. Yet a 2007 study of Britain, the Netherlands, and Sweden found no such evidence.86 A lack of language skills does contribute to isolation, and most countries now require language classes for new immigrants; the vast majority of Europeans support such requirements. One area of increasing agreement is that multiculturalism (the practice of extending equal recognition to all immigrant groups’ practices alongside native culture) has largely failed, and many European countries are reversing such policies. British and Swedish policies are mentioned earlier. The Dutch and Danish authorities insist on newcomers being exposed to and learning about native cultures, while authorities clamp down on religious and cultural practices that violate domestic laws. The Netherlands now requires all immigrants to pass a Dutch-language test (which many fail) and a culture exam, which includes a video featuring nudity, homosexuality, and smoking pot (all decriminalized and accepted in Dutch society). Anyone seeking to bring in their spouse must also prove they earn well above minimum wage. Denmark restricts immigration by marriage and requires a deposit with the government to ensure the new resident does not become a burden on society (this law was challenged by a 2008 ECJ ruling on Irish immigration and is presently under review). Spain, which accepted more than 4 million immigrants during the decade long construction-led economic boom from 1999 to 2008, is now implementing a voluntary return policy. In 1996, Germany reduced immigrants’ eligibility for most social assistance programs (aid to families with dependent children, supplemental security income, and food stamps), and since 2000, citizenship applicants must demonstrate “German-ness” by participating in language classes and


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an introduction to the country’s justice system, culture and history; children must speak German, and spouses wishing to join their partners must achieve a level of proficiency in German.87 In July 2009, Italy became the first European country to criminalize illegal immigration itself (a misdemeanor in the United States, believe it or not), while imposing heavy fines for anyone hiring or assisting illegals. Authorities can now detain suspects for six months instead of the previous two months, and the public is now encouraged to report any suspected activity. Some say this encourages vigilantism, but it is yet another sign of tougher asylum and immigration laws adopted across Europe (a similar trend is found in regard to terrorism).

EU Action A new EU program on asylum, immigration, and police cooperation was adopted in December 2009 (the Stockholm Program). It spells out how the Union will address these and related issues until 2015. Europe is in the difficult process of adapting its civilization, incorporating and adopting new influences in ways America has done for more than 200 years, creating a religiously and ethically diverse, and vibrant society, all while refusing to budge on fundamental democratic values and principles. It has a long way to go before achieving this melting pot. European surveys show Europeans

Table 6.4

Views on immigration Positive view of immigrants

Bulgaria Britain Czech Republic France Germany Italy Poland Slovakia Sweden United States

23 47 17 44 30 41 33 12 79 57

Restrict and control immigration more than we do now 53 75 75 68 66 87 53 64 53 75

Sources: Eurobarometer 66, “World Publics Welcome Trade—But Not Immigration,” October 4, 2007, Pew Research Center’s Global Attitudes Project.

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want tough measures and largely support the immigration reforms outlined earlier, but they also reluctantly recognize the need for immigrants, primarily to fill job vacancies. Most Swedes, French, and British citizens welcome immigration from Eastern Europe and north Africa, whereas the Germans and Italians are more reticent.88 A full 77 percent of Swedes say immigrants contribute a lot to society, but only a third of Germans agree; nearly half of the French and Dutch see immigrants as an opportunity for their countries, while the EU average is 40 percent.89 Birthrates across Europe have long been at dismal levels. They have improved slightly in recent years, moving from well below the repopulation requirement in many countries, to some places even seeing a small growth. Yet this process remains slow and uncertain, leaving no practical option to replenish the population over the next quarter of a century short of opening Europe to more immigrants. Recognizing the sensitivity of the matter, the uncomfortable mix of needing more immigrants to fill labor shortages while having problems assimilating those already in Europe, the EU has taken several steps. An EU migration network and an integration handbook allow policy makers and researchers to share experiences in integration and policymaking. There are EU funds to support national programs covering areas such as civic orientation, language, culture, and history, and familiarizing immigrant religious leaders with European values. An EU “blue card” (similar to the American “green card,” i.e., permanent residence card) for skilled migrants from non-EU countries is intended to help ease the labor shortage. The EU sets common standards for qualifications and pay, and there are enforcement provisions and heavy penalties for employers illegally taking on immigrants and paying them unfair wages (a policy that has not worked well in the United States). In complementary fashion, several countries, led by Britain, have also made it easier for foreign nationals graduating from domestic universities, and armed with a job offer, to stay and eventually take up residence; again a path previously taken by America. Whether the above initiatives can work remains to be seen. Predictions are mixed. Signs of increased acceptance of a multiethnic and multiracial Europe, underpinned by liberal democratic values and principles, are countered by racism, far-right parties, and studies showing declining levels of tolerance. Yet three bright spots offer optimism for the future. Studies show that mixed neighborhoods, with minority groups of 10 percent of more, over time exhibit fewer signs of racism (contact theory asserts that continuous and consistent exposure diminishes misperceptions). A significant portion of small business ventures in several anti-immigrant regions, such as northern Italy, are run by immigrants, so commerce offers avenues of mutual interest. Furthermore, young, mobile, tech savvy, Europeans


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raised in a heterogeneous union seem to care less about race, nationality, or language, and more about character and skills.90

Crime: Worse than Some, Better than Most Americans may interpret European policies such as banning gun shops, disallowing concealed weapons, or even having unarmed police officers, as being “weak on crime,” yet European countries have homicide levels far below the United States. Space limitations prevents an in-depth analysis of the many historical and legal reasons for this, but suffice to say centuries of warfare led to severe restrictions on gun ownership and bans on citizens carrying handguns. The exceptions are Finland and Switzerland, militarily neutral countries with large hunting populations and universal conscription; both have more handguns per person than the United States, but still far fewer homicides. Violent crime is difficult to compare since different laws mean the same act may be designated differently across countries. That said, some general observations of nonhomicidal crime rates are possible. Burglaries and robberies are actually higher in Britain than in the United States; and across the continent soccer hooliganism (criminals disguised as soccer “fans” fighting each other inside or outside stadiums) and drug sales and use cause major problems. Furthermore, assaults and murders in Sweden doubled from 1998 to 2008. One study shows the risk of being assaulted is higher in Britain, Ireland, the Netherlands, Belgium, Sweden, and Denmark, than in Italy, Portugal, Hungary, Spain, and France. However, overall victimization of the 10 most common crimes (including things such as burglary and property theft, but not murder) dropped in every country except Belgium and Denmark between 1995 and 2004, while homicides dropped 3 percent.91 There are many reasons for the decline. Some studies find correlations between higher educational achievements and lower crime rates, and a higher percentage of Europeans finish high school and college than do Americans.92 Fewer young males (the re-population problem rears its head again), better policing, and more home security systems are among other reasons posited. Sentencing policies, which remain less punitive than in the United States, do not appear to affect crime rates. A 2005 study finds “No relationship between the severity of sentencing of countries and trends in national levels of crime.”93 Nonviolent crime is also a problem. According to the 2008 Transparency International Corruption Index 11 European countries have lower levels

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of corruption than the United States. At the bottom of the list among EU countries, we find Italy, Romania, and Bulgaria; Bulgaria even has the distinct dishonor of being the only EU country to be fined by the EU itself for financial irregularities, poor accounting, and lack of transparency. Italy, the home of pizza and the Camorra clan, is struggling to keep democratic principles in shack. Though obviously difficult to verify illegal activity (therefore the name), several books and studies show similar trends. Mafia clans have infiltrated much of southern Italy’s business and service sectors, running everything from pizza parlors, to construction companies and prostitution rings out of night clubs in Milan, Turin, and Verona.94 Italy’s undeclared economy is estimated at the equivalent of a quarter of its GDP, a figure so large that were it added to the official economy Italy would surpass all European states but Germany.95 Yet like many of its citizens, the Italian parliament prefers to live in denial of these problems. A 2002 law shortened the statute of limitations so much that Bruno Tinti in Toghe Rotte (2007) estimates that they expire for close to 90 percent of common crimes. Leading social and political figures, including the prime minister, draw benefits from a resource deprived and backlogged judicial system, and most express a general lack of sincerity in addressing what may be Italy’s biggest problem since Mussolini’s fascist regime (1922–1943). Yet even here there is hope. Foreign investments in 2008 dropped faster than anywhere else in Europe as businesses began complaining about corruption; Italians love business, so this may spur real reforms. Second, as bloated budgets lead to a nearly unbearable national debt, resulting in penalties from the EU and less funding for social programs, citizens may finally demand change. Third, private citizens and local business people in Sicily have joined forces in refusing to pay bribes to local mafia leaders in return for “protection” (read: not have your business damaged), and the military’s special forces have been used against the mafia. The conviction of 49 mafia members in July 2009 was heralded as a major breakthrough in the fight against organized crime.96 Perhaps as surprising as all the above is that Italy still remains one of the largest economies in the world, not least thanks to its fashion, food, and soccer. As the Italians like to say, “Soccer is not a matter of life and death, it is far more important than that.” Humor aside, citizens across Europe, on both sides of the ideological spectrum, are unequivocally united in their expressed concerns that there is too much tolerance of criminal activity. Citizens are demanding tougher punishments.97 Politicians are responding with more police (including the use of the military in Italy), enforcing the full length of prison sentences, and building more prisons, all while seeking to improve rehabilitation and reintegration into society, and cut recidivism. Reforms also include differentiated and targeted penalties, everything from weekend imprisonments


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to revoking credit cards and driver licenses, without having the judicial systems being perceived as weak;98 thousands of tax evaders have also been chased out of hiding in small tax havens like Lichtenstein.99

Terrorism The British endured a long fight against the domestic terrorist group Irish Republican Army (IRA), who fought for an independent Ireland for 90 years by bombing public places in England. A strategy of military oversight and active police engagement focused on confidence building, along with social and community development, won the hearts and minds of the vast majority of participants, leading to the IRA’s dismantlement in 2007. A few radicals from a splinter group killed two police officers in 2009, but separatist terror activity has all but vanished. Islamic radicalization is now the major threat, as seen in the 2005 London attacks that killed 57 people, and where 3 of the 4 perpetrators were British citizens. This attack, as well as that in Spain in March 2004 (191 people killed; 30 convicted in 2008), were not caused by, nor were they retaliation for, the two countries’ participation in the 2003 American-led invasion of Iraq. They were targeted the same way the United States, Germany, and other western states have been targeted by al Qaeda terrorists: simply for being part of “the west.”100 There have been numerous foiled attacks in other European countries, including Denmark and Italy, most believed to be either orchestrated or supported by Islamic extremists. The Germans, who thought terrorism was defeated when the 1970s Baader-Meinhof Group (Red Army) disbanded in 1998, uncovered several plots in 2006 and 2007, the largest dubbed “Germany’s 9/11.” Four radicalized Muslims with ties to al Qaeda were brought to trial in 2009, accused of planning to kill thousands at German nightclubs and American military barracks. The massive case is not expected to end until 2011, so I urge you to check the verdicts. Spain continues to battle Basque separatists (ETA) who have not hesitated to kill police officers, but ETA’s popularity has plummeted after numerous members were jailed, and more autonomy awarded the region. A desperate ETA campaign of terror in 2009, killing or wounding more than 100 people in 8 attacks, led only to a further outcry against violence, the election of parties to regional government that oppose independence, and increased support for the police and prosecutors’ tough measures to finally eradicate this group.101 All the above sounds terrible, but it helps knowing that only 7 countries experienced attacks in 2007, and the number of attacks in Europe

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decreased by 25 percent from the previous year. Approximately 80 percent of attacks either planned (most cases) or executed (a few) were the works of regional separatists, and nearly all of them were in Spain (in the Basque region) and France (on the island of Corsica).102 Europeans are as concerned about security as Americans, but most see terrorism as a criminal element; a social problem requiring security, police, and social efforts. This is another major reason why assimilation, integration, and social inclusion of immigrants, including second generation youngsters, are emphasized throughout Europe.

So What Has Been Done in Terms of Security? With the threats of terrorism, and the EU’s open internal borders, the questions battered about in Europe are the same as in the United States: how to draw the appropriate line between security and liberty, between preventing and fighting terrorists, and upholding national, regional, and international humanitarian and human rights laws.103 There is a European Security Strategy (akin to the US National Security Strategy) that makes clear that Europe is a target of, but also a base for terrorism, requiring cooperation, integrated police registers, and common border regulations. There is now an EU arrest warrant and increasingly harmonized criminal codes and penalties. There is an EU system for sharing intelligence and investigatory information (the Schengen Information System). Eight European countries have intensified police cooperation, to where criminal files are shared and police can pursue criminals across borders; more countries are set to join in 2010 and beyond. There is a European police academy, and a European-wide police agency, Europol. There is also an implicit understanding among member states that an EU state subject to attack will be provided all available assistance from other members and the EU agencies; this agreement is formalized in the new EU treaty expected to take effect in 2010.104 Country approaches still differ somewhat. In Spain and France, terror suspects can be held for up to four years in pretrial detention. Although criticized by some observers, such measures enjoy public support. Little changed after the 2004 attacks, except now there are severe penalties for membership in any group that encourages criminal activity, as is the case in most European countries. Sweden in 2008 passed Europe’s most farreaching wiretapping law, one which in many ways mimics the 2001 US Patriot Act, allowing the intelligence service to commence surveillance without a court order. Germany, Spain, and Italy also make extensive use


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of wiretapping, and the two southern states also use Geramenderies (a cross between police and military) in antiterrorism and mafia operations. France allows magistrates (a cross between prosecutor and judge, and with extensive investigatory power) to authorize search warrants and wiretaps, issue subpoenas, and conduct interrogations of terror suspects without a defense lawyer for 72 hours. The French also have two domestic intelligence agencies that infiltrate suspected groups, and most public spaces are covered by closed circuit TV (CCTV) surveillance. Though it has foiled several attempts, and works closely with Spain to apprehend ETA suspects, France has not experienced any terrorist attacks on its mainland since 1995. More CCTVs cover public spaces in Britain than anywhere else in the world, and they helped identify the perpetrators in 2005. Its antiterror laws allow detention without charge for up to 28 days, and encouraging or inciting terrorism, or merely possess a terrorist training manual—even one that is available for download on the Web—carries heavy penalties. Because some civil liberties are less formalized, British authorities have more leeway to preemptively arrest and interrogate a suspect, or make use of “protective orders” (which can limit the movement of individuals, impose curfews, and prohibit meetings with nonapproved persons, use of the Internet or mobile phones, and dictate place of residence) with far less evidentiary rigor than would be required in the United States.105 Evan Kohlmann of Global Terror Alert notes that “there are quite an assortment of individuals in the United States who have carried on terror-related activities for which they will never be punished, but very well might have had they been subject to European legal jurisdiction.”106 It is less appropriate for Americans to ask whether Europeans desire to deter, and failing that, prosecute terrorists, but rather whether they would accept some of the strict laws, extensive strategies, and intrusive tactics allowed throughout Europe.

Quality of Life Is Lower than in the United States: Let’s Talk Patrol Boats, Cartoons, Female CEOs, Fresh Fish, and Smiles Variations Europeans are less happy than Americans because they are less free. Western European standard of living is about a third lower than the American standard of living, and it’s sliding.

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. . . wine-sipping, polo-playing Europeans with long vacations are . . . snotty and aristocratic.107

Good friends of mine in Frankfurt, Germany, worry about rising gas prices, energy, personal security, the economy, and climate change, concerns shared by my neighbors, myself, the European and American people, and probably you as well.108 However, just like Martin in Skara, or Peter, a colleague in Antwerp, Belgium, my German friends can drop their kid at a good public child care center, drive to work on largely pothole free roads, be confident they can send their child to university should he or she pass entry exams, and never have to worry about losing their home should one of them fall gravely ill. There is still a widespread assumption in the United States that Europeans overall have a lower standard of living and quality of life, yet the United Nation’s Human Development Index (which combines education, health, and income statistics) has the Nordic countries on top, followed by most of continental Europe, and they are all ranked higher than the United States. Although all issues discussed in this and other chapters in some way address Europeans’ quality of life, this last section both sums up and expands on a few general areas affecting most people on a daily basis. We begin where we left off in the preceding entry.

Freedoms Enshrined The EU treaty guarantees the principles of liberty, democracy, human rights and freedoms, and the rule of law, and so the problems of immigration and crime discussed earlier should be seen against strong, legally enshrined, liberties and responsibilities. These rights extend throughout the union irrespective of citizenship. Contrary to assertions that “instead of protecting individual rights they [Europeans] sought an idealistic equality of outcomes administered through the state” even a brief glance reveals strong guarantees of personal freedom and freedom of expression.109 The ECJ has made several rulings enforcing free speech in, for example, competition policy and overturning domestic bans on claims that certain foods help fight cancer.110 An EU citizen can also bring charges in national courts against their own government for breach of EU law, and when visiting or working in a country lacking an embassy of their own any citizen has the right to seek assistance at any other EU country embassy and can expect treatment equal to that of the embassycountry’s nationals.


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European free speech and press freedoms are solid. Here are some examples. In 2006, Danish Prime Minister Rasmussen’s refusal to take action against newspapers publishing cartoons depicting the prophet Mohammed as a terrorist was premised on an unbending belief in freedom of speech and a free press: no censorship of any content, and no form of government interference. Other European governments explicitly supported such a stance, acknowledging the obvious: that any speech will offend someone at some point for some reason. Though Britain’s antiterror laws have been called draconian, the country has perhaps the most inquisitive and scrutinizing press of all. The state-run British Broadcasting Company has a global reputation for in-depth and fair analysis, and it is often touted as a model of rigorous, investigative reporting. Britain’s Freedom of Information Act is also one of the most extensive anywhere in the world, and Denmark, Sweden, and the Netherlands have similar laws. Poland’s constitution contains explicit and detailed guarantees of individual liberties, rights, and obligations, and in 1997 it also passed a sweeping press freedom law that includes free legal assistance to journalists accused of wrong doing by any individual or group. Poland also supported the establishment of an independent, nongovernmental, Freedom Monitoring Center, as well as centers to coordinate freedom of the press throughout east-central Europe. Copyright laws have been violated globally through illegal downloads online, but Sweden’s 2009 prosecution and conviction of providers of illegal material set a precedent for other countries. While one can take issue with the idea of tax money subsidizing newspapers, the Swedish and French states defend their practice of supporting smaller publications as a means of ensuring the dissemination of ideological diversity, in other words, a full spectrum of ideas.

Culture Regional integration is now part of the daily landscape. In an American bagel cafe in London, I was assisted by a Czech, rung up by a Finn, and conversed with a Hungarian employee mopping the floor; at Schipol Airport in Amsterdam, I was served coffee by a Swede and in Brussels, a Latvian woman directed me to her Swedish boss of a Czech company. Polish workers are ubiquitous, especially in Ireland and Great Britain, and when visiting the small Baltic states there is no escaping the Swedish and Finnish influx (capital, businesses, and people), even if Russians constitute the largest minority. A European identity is now increasingly visible (see also chapter 3), complementing rather than replacing national and/or ethnic identities.

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We saw earlier that education in Europe is cheaper than in the United States. Another advantage now available to Europeans is the social enrichment of studying in another country. Students in the United States frequently apply for and attend colleges and universities outside their home states, and thanks to European integration EU citizens can have the same experience millions of Americans take for granted when crossing state borders for school and work. A 20 year old from Lisbon can study in Helsinki, work in Hamburg, take the ferry to Sweden or Denmark for a weekend getaway, go skiing in Austria, and retire in Cyprus, all without filling out visa applications or most other forms previously required between the different member states.

Quality Food Satisfying one’s palate in the company of dear friends is truly a part of any good life, and my own predilection for carnivorous delicacies knows few boundaries. The sheer thought of pork loin in Copenhagen, a fire-roasted rack of lamb in Heraklion on Crete, a Kebob anywhere in West Ham (suburb of London), or the overstuffed fresh crab, shrimp, and salmon sub in the Fish-church in Gothenburg are every bit as good my American favorites: the pulled pork at Interstate BBQ in Memphis, TN (must surely be the world’s best), the whole grain bread at Misto Café in Torrance, or the Cuban po-boy at Mother’s, New Orleans. Sure, the British are notorious for heavy drinking, and raucous weekend stags on the continent, where alcohol is cheaper (airfare is so cheap from London to Prague it pays to fly to the Czech Republic to drink). As is the case throughout Scandinavia, Britain’s relaxed approach to alcohol means publicly drunkenness, especially among teenagers, is a problem, but the vast majority of people drink in moderation. Many of Britain’s own varieties of bitter and ale are definitely first-rate. The chow has improved beyond the fish and chips to some reach real culinary delights thanks largely to the likes of celebrity chef Jamie Oliver, and uncountable Indian and Pakistani restaurateurs. Europeans’ skepticism toward genetically modified foods (most are banned) may rightly be called foolish, even ignorant of scientific data, as the EU’s own food agency has found them safe. But the centrality of food, culturally and socially, partly explains why Europeans have to pay more for food than Americans. Large farmers are incredibly efficient, but farms of all sizes are lavishly subsidized. Hard as it may be to imagine, European subsidies are significantly more generous than the $50 billion America spends annually, thus enabling thousands of midsized European farms to stay


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afloat. Despite the resulting overproduction (which often leads to the disposing of food to keep world prices high), internal competition and cheap imports contributed to lowering food prices 10–30 percent between 2003 and 2006.111 Imagine how much cheaper food prices would be without tax funded subsidies to prop up prices! Yet the European public, much like the American, supports maintaining regional- and medium-sized farms rather than having regions specialize, or producing everything on mass-scale.

Happiness Happiness is difficult to measure, and the results are by definition subjective. Eight out of ten Europeans say they are satisfied with their life in general, and the numbers for the Dutch, Danes, and Finns are even higher.112 Satisfaction and happiness are found to be most closely associated with one’s health levels, followed by wealth, and then provisions of education. Another international survey shows that a high-taxed and high-tech people, who provide the world more soccer-greats per capita than anyone else and view free speech as sacrosanct, are happier than most. Yes, it is the Danes. They have learned to live “the good life” while maintaining one of the lowest levels of government debt in the world, and some of the most productive workers. It is not that blondes have more fun (Sweden, notwithstanding immigration, still has more of them), but rather, according to professor Kaare Christensen at the University of Southern Denmark, a combination of humble expectations, extensive social security, low crime, and high-quality products.113 But the Europeans are not that different from us. A 2002 national survey found 89 percent of Americans to be content with their jobs, and most would work even if they did not need the income. Professor Arthur Brooks finds no difference in levels of satisfaction between low- and high-income earners, or between college and high school graduates. He says, “Obviously, there is a point beyond which work is excessive and lowers life quality. But within reasonable bounds . . . the American formula of hard work appears to function . . . , 56 percent of Americans are ‘completely happy’ or ‘very happy’ with their lives.”114

How about Women’s Rights? The average European woman’s earnings are much closer to par with her male colleague than is the case in the United States, and university

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educated women earn more in all European countries except Germany and Switzerland than they do in the United States (as a percentage of male salaries).115 For example, Spain’s infamously low female labor participation rate shot up by half during the economic boom from 2001 to 2007, as millions of women entered the workforce. When it comes to female board of directors, look no further than three Scandinavian countries to find 25–42 percent women, but at 15 percent the United States is better than many continental European countries.116 The vast majority of Europeans believe gender has no affect on political proficiency, but onethird of European conservatives believe men are better decision makers, as do majorities in Slovakia and Romania, a view they share with a majority of Americans.117 European women can also expect improved conditions in retirement. The ECJ (hearing a case regarding Greek civil and military pension codes) found, based on EU laws prohibiting gender-based pay discrimination, that when pensions are based entirely on years worked, not contributions (i.e., social security) unpaid work must be counted like any paid labor. The court said that if different social roles leave women with fewer years of paid work, this should not result in lower pensions.118 As with US Supreme Court rulings, this ruling now applies across the entire EU.

Are the Europeans’ Achieving the “American Dream”? The widely studied “American Dream” (happiness, freedom, materialand economic well-being) is premised on a belief in social equality and just institutions; of extending opportunity to everyone, favoring no one, and allowing hard work and talent to shape outcomes. Everyone has the chance to pull themselves up, to maximize their talent, and fulfill their goals and aspirations. This backbone of American life, the American creed if you will, creates expectations that each generation will be better off than the one before; that more people move up the social and economic ladder. By contrast, a common view of Europe goes something like this: The incentive to rise up, work hard, and improve one’s life if born in Denmark or France is low because of social guarantees that you will have food, education, and shelter. Should you nonetheless miraculously realize a desire for more than simply a comfortable subsistence, the incentives to improve


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your plight are also stymied by government regulations focused on equality of outcome rather than opportunity. In other words, the ghost of egalitarianism stifles innovation and competition. Although true that the list of Americans “lifting themselves up by their bootstraps” to achieve the American dream is long and impressive, and middle-class Joe, in hopes of joining the list, will likely remain opposed to any welfare programs that “take from the rich to give to the poor,” the number of upwardly mobile Americans is in fact dwindling. An increasing number of studies show no relationship between less redistribution (“smaller government” and fewer transfer payments) and upward mobility, lending another blow to the argument of social stagnation in welfare states. A Finn, Swede, Dane, German, and even Canadian, is more likely than an American to improve their economic situation and social standing over their lifetime compared to their parents, and a British baby born today has as great a chance of doing well as someone born in Charleston or New York.119 Older workers “in virtually all European nations experience improved incomes (relative to average [national] income growth) during their forties and fifties, . . . the US pattern is just the opposite.”120 Even people in the relatively recently democratized Eastern Europe are overwhelmingly satisfied with the progress made over the past 20 years, and they have a higher percentage of people optimistic about the future than is the case in the United States.121 In sum, more Europeans than Americans are today moving up the ladder, making more money, and enjoying higher living standards, compared to their parents’ generation. Another nail in the coffin of American uniqueness; we are certainly good, but no longer unique. It appears that younger Americans are recognizing this as well; half of the respondents in the College Survey 2009 believe Europeans enjoy the same living standards as Americans. This bodes well for future relations, and the avoidance of misperceptions.

Concluding Commentary and Summary Whether choosing a doctor, attending college, biking, eating, or traveling, many Europeans enjoy an enviable quality of life. While they like to blame “Brussels” (the EU) just like Americans blame “Washington” for meddling in their lives with nitpicky regulations, Europeans appreciate what they have, which includes the international respect that comes with being a rising superpower in many areas (economic, aid, finance, even peace keeping), an issue to which we now turn.

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Suggested Readings 1. T.R. Reid, Sick around the World, WGBH Frontline in coproduction with Palfreman Film Group, Airdate April 15, 2008, http://www.pbs.org/wgbh/ pages/frontline/sickaroundtheworld/. 2. A video on studying, working, and retiring in European countries other than your own European Union, Europe Direct, EUtube, video, posted June 15, 2007, http://www.youtube.com/watch?v=RG5tx9y47Lo&feature=related. 3. Linda Hantrais, Social Policy in the European Union 3rd ed. (New York: Palgrave Macmillan, 2007). 4. European Union, Healthcare without borders, EUtube, video, posted October, 2008, http://www.youtube.com/user/eutube?blend=1&ob=4#play/uploads/96/ amRzRnuX7fo.

Chapter 7 Europe’s Global Tentacles Reach You Everywhere: Trade, Law, Business, Armaments, and Military Operations

Europeans Believe Talk, Aid, and Trade Can Resolve All Global Problems: Addressing Kagan and Others Variations Europeans live in a post-modern world where they assume ideals and values can overcome any challenges. American military power has made it possible for Europeans to believe that [military] power [is] no longer important. . . . appeasement is never a dirty word to those whose genuine weakness offers few appealing alternatives. For them it is a policy of sophistication. The Germans and the Europeans aren’t doing much to help Africa. It’s the United States doing that.1

Although the 9/11, 2001 attacks crushed Americans’ perceived invulnerability, instantaneously changing peoples’ view of the world, the attacks did little to alter people’s perspectives across the big pond.2 A year later respected American Conservative, Robert Kagan, was decrying how Europe lingered in oblivion of the changed world around them, arguing that European statesmen sounded like the Americans of the eighteenth century “extolling the virtues of commerce as the soothing balm of

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international strife and appealing to international law and international opinion over brute force.”3 Arguments that might is power, that appeal to international law and institutions are signs of weakness, and that Europe is ungrateful and unwilling to recognize America’s military strength as being the reason it today enjoys peace and prosperity, find a receptive audience in the United States, where people’s deep-seated beliefs of exerting influence “by the muzzle of a gun” are rooted in the constitutional guarantee that your own personal weapon is your ultimate means of security, and that overwhelming American military might has enabled international dominance in all areas. Europeans have not forgotten the sacrifice by American soldiers. However, Europeans remain reticent about using military force precisely because, better than most, they understand the horrors of death and destruction. They have experienced firsthand their cities and countries be torn apart in two world wars, followed by decades of terrorist threats in the west, and totalitarianism in Eastern Europe. Most Europeans realize full well that the world remains dangerous, occasionally requiring military power to ensure delivery of aid and development, or to repel the worst undemocratic regimes, such as forcing Saddam Hussein out of Kuwait in 1991, or stopping Milosevic’s attempt at ethnic cleansing in Kosovo in 1999 (see table 7.2).4 But while the British (and largely the Danes, Dutch, Italians, and Polish) share more of the American view on where and how to use force than many continental Europeans, the overwhelming European sentiment is that agree that use of military force should be a last resort, not the predominant means of influence in today’s world. This is important because if you look closely you will find little difference in the foreign policy objectives, or goals, espoused in Berlin, Brussels, London, or Washington DC (spreading democracy, fighting terrorism, climate change, or dealing with the rise of China). However, Europeans see greater opportunities for success when addressing the roots causes of instability and threats, and they perceive the rise of China as an economic opportunity and chance for democracy rather than primarily a military threat. Most Europeans subscribe a modern version of idealism (attributable to American President Woodrow Wilson), also called institutionalism, where values, economics, and diplomacy—incentives and penalties—are key to cooperation, stability, and prosperity. This is referred to as “soft-power,” the use of diplomatic efforts, along with economic enticement and legal pressure, to compel others to act in desired fashion.5 This entails prioritizing human over territorial security because current day threats span all borders; after all, the costliest attacks on developed countries over the past decade have come from financial markets, severe weather, and terrorists. Promoting democracy is also important in

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this context and is part of “securitized” civilian foreign policy. Spreading democratic principles diminishes the likelihood of having to deal with the fallout of failed states and civil war down the road. A prerequisite for receptivity to one’s argument is presentation. Language and style matter, and former American Ambassador to the European Union (EU) Rockwell Schnabel argues that by framing issues in a simple good-bad dichotomy, the EU gains additional “soft power, and nowhere is the EU more clearly able to do this than through international treaties, conventions, and organizations. America has felt the impact of this power more than once in the last several years.”6 By speaking with one European voice on major international issues, such as signing onto the Kyoto Treaty on climate change, the International Criminal Court, and supporting a ban on landmines, the Europeans can play the role of “good guys,” winning moral and political support in the eyes of public opinion and foreign governments, and often convincing others to follow suit. All the while the United States is vilified, even though, in practice, America has proven to be as environmentally responsible as most Kyoto signatories, US troops adhere to legal codes of conduct, America courts provide strong legal safeguards when trying international suspects, and all the Americans asked for in regard to landmines was an exception for the border between south and north Korea; this at a time when Finland refused to support the landmine ban because of its long and porous border with an increasingly unreliable Russia. There is also some evidence of the EU’s effectiveness, as discussed below. Furthermore, the decade from 1995 to 2005, when the EU began its international efforts and Eastern European countries joined the union, saw the fewest armed conflicts, and the greatest rise in the number of both democratic states and international trade, since World War II.

EU Economic and Regulatory Clout Though frequently eluding American media headlines, the EU is changing international affairs through trade, the setting of international standards, court rulings, foreign aid, norms, incentives, and work in other international organizations. When it comes to trade, the EU is a giant. Exports to far-eastern Europe, Russia, and the Middle East jumped more than 110 percent in 2006, making the EU the largest trading partner of every country in these regions. The EU has trade agreements with 173 countries, and it allows duty-free imports of most goods, aside from certain agricultural products. European citizens also believe free trade as beneficial to their own well-being, as seen in table 7.1.

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Table 7.1

Public opinions on trade

Country

United Britain Sweden Czech Germany Italy Spain States & Republic & France Slovakia

Trade is good for my country

59

78

85

80

85

68

82

Source: The question was: What do you think about the growing trade and business ties between (survey country) and other countries—do you think it is a very good thing, somewhat good, somewhat bad or a very bad thing for our country? Combined completely agree and mostly agree. “World Publics Welcome Trade—But Not Immigration,” October 4, 2007, Pew Research Center’s Global Attitudes Project; “Global Public Opinion in the Bush Years (2001–2008) America’s Image; Muslims and Westerners; Global Economy; Rise of China,” December 18, 2008, Pew Research Center’s Global Attitudes Project.

The EU trades more with the United States than anyone else, and the figures are rising, up 40 percent in 2003–2007.7 Americans buy more from Europe than vice versa (predominantly transportation equipment, chemicals, and electronic products),8 but the EU remains America’s largest, and most important, market. Officials on both sides go out of their way to not upset this relationship, which is clearly very beneficial for businesses and consumers, even when differences arise. For example, since 1996 Europeans have refused to import American hormone treated beef, ostensibly out of concern for their citizens’ health. Yep, many Europeans really believe that millions of Americans, myself included, indulge in unsafe beef, despite the absence of any scientifically validated danger (aside, of course, from the fat and cholesterol, but last time I checked European cattle had those too). Despite the ban, three consecutive American administrations have hesitated to impose high retaliatory tariffs on even a fraction of European luxury exports to the United States, because even such a small percentage represents a huge sum in transatlantic trade. When the Obama administration finally decided to impose tariffs, an agreement was reached before the deadline in May 2009, allowing a tripling of American nonhormone treated beef exports to Europe; the tariff threats were dropped as negotiations continue concerning all beef.9 Likewise, in the largest every dispute, more than billions in European subsidies to Airbus and American subsidies to Boeing, eight years of talks have yielded little progress, but both sides want to avoid a legal battle and reach a mutually acceptable agreeable; such is the importance of the EU market. You can follow this ongoing dispute on the World Trade Organization’s (WTO) Web page at http://www.wto.org.


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EU-US trade is much more balanced than either side’s dealings with China. The EU’s trade deficit with China is smaller than America’s, mostly because European goods, ranging from German cars, French power companies, to Italian fashion have become popular in China, and the EU is on track to becoming China’s largest export market by 2011.10 The EU and United States both supported Chinese accession to the WTO as it would not only open market opportunities for businesses, but force China to adhere to WTO rules, and allow for legal action against China should they engage in unfair trade practices. European and American businesses have since used this accession to channel their outrage, resulting in several formal government complaints of unfair Chinese competition. The two have accused China of “dumping” (selling a product in a foreign country cheaper than it is sold at home) and unsafe products (several foods and toys were found unhealthy and dangerous in 2008), and in September 2009 US President Obama imposed a tax on Chinese tires entering the American market, with the EU contemplating similar steps.11 Neither America nor the EU nor China want a trade war, everyone benefits from fair trade, but if the Asian nation will not abide by trade rules, the EU and the United States stand united in their approach toward China.

Lobbying the Powerful: EU Sets Global Standards European standards are often the most stringent in a given industry, and they are increasingly adopted by African nations, Japan, and China. Already in 2002 the Wall Street Journal wrote that most of the largest traded sectors (agriculture and industry) were conforming to EU standards, and today the same applies to accounting and toy safety standards.12 In regard to agricultural regulations, telecommunications, and a myriad of other policy areas “whether they like it or not, rice farmers in India, mobile phone users in Bahrain, makers of cigarette lighters in China, chemicals producers in the United States, accountants in Japan and software companies in California have all found that their commercial lives are shaped by decisions taken in the EU capital. ‘Brussels has become the global pacesetter for regulation.’ ”13 As the trade representative of all EU countries, recognized under international law, and the guardian of this unified internal market, the EU Commission has significant powers that extend globally, and they use them. By urging compliance through dialogue and trade agreements, it uses the size and appeal of the EU’s lucrative market, as EU Commission

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President Barroso made clear, “We are one of, if not the most important, normative powers in the world. we have been successful in establishing norms, and applying them to different realities . . . It is in fact the EU that sets the standards for others much of the time.”14 In 2007, the American Securities and Exchange Commission stunned many when it declared that American businesses can now switch to using the international standards written by the EU, not only abroad, but also domestically.15 In another EU’s standards extend to American farmers who depend heavily on exports and thus must conform to the product standards set by the Europeans. Former American Ambassador to the EU Rockwell Schnabel also points out that in an age of global terrorism and struggles to balance security and personal liberty, most large countries in south America, along with Japan, Canada, and Australia, have adopted the EU’s rules on personal data privacy. The EU Commission also convinced the US Department of Homeland Security to cut its storage of passenger data on transatlantic flights from a proposed fifty to three and a half years, and “to use the data solely in connection with terrorism and other transnational crime.”16 The EU Commission has legal authority to oversee business practices and preserve competition in all areas of commerce except defense, as well as mergers between most medium and large companies with significant sales in Europe.17 In so doing it takes account of the global and the European areas when deciding if the result of a business deal distorts competition. Businessweek reported in 2007 “From food safety to Internet privacy to auto emissions, the EU is setting ever more rules for companies that want to play in its $13 trillion economy. . . . [its] antitrust watchdog has hit corporations with $3.6 billion in cartel-busting fines, nearly eight times the total levied by the US Justice Dept.’s Antitrust Div. during 2006 . . . EC regulators have won a $613 million antitrust judgment against Microsoft, launched an investigation of pricing by US chipmaker Qualcomm, and announced plans for sweeping new regulations on cell-phone operators and utility companies.”18 In addition to Microsoft, Intel was fined $1.4 billion in 2009 for anticompetitive practices, and the Commission continues to clamp down on unfair and illegal practices. For example, in 2000 the Commission approved the merger of America Online (AOL) and Time Warner after certain conditions were imposed on AOL; it blocked the 2001 merger of General Electric and Honeywell, despite approval from US authorities. This has meant changes in American business lobbying. One Texasbased executive vice-president of a medium-sized company producing reservation systems said he had not been to Washington DC once in 2007, but “to Brussels three times to lobby EC transportation and anti-trust regulators.”19 Roughly 2,000 American lobbyists join another 13,000


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already in Brussels, and Americans spend an estimated $150 million trying to sway policy makers and influence European legislation on everything from chemical products composition to telecommunications, agricultural policies (e.g., allowing US genetically modified crops), to EU asylum policies. Chemicals constitute the second largest area of transatlantic trade and among the largest globally. A 2007 EU regulation on chemicals in commercial and consumer products (REACH) means all industries manufacturing, marketing, or selling in or to Europe must explain the human and environmental impact of their product, or lose billions of dollars in sales. The European Chemicals Agency also requires safety reports on most products and a fee-based registration of thousands of euros. American analysts and business groups agree that compliance is necessary, meaning production and reporting will change across the globe.20 A 2008 global survey of 29 countries by PricewatershouseCooper revealed little preparation for REACH, especially in North America and Asia,21 so the US Department of Commerce established procedures to help small- and medium-sized businesses comply, while large companies have consulting firms that are making big money advising on EU standards; Dow Chemical alone had two dozen people devoted to REACH in 2008. As all these examples show, soft power can be effective. Another way influence is exerted in through the reach of Europe’s highest court. In September 2008, the European Court of Justice (ECJ) ruled on a case of significance in the international fight against terrorism. The ECJ found that the EU’s application of the United Nations (UN) sanctions against Yasin Qadi and the al-Barakaat International Foundation to be in violation of EU law. The ruling did not question or invalidate UN sanctions, which were desired and supported by the United States and other states, but the judges opposed the fact that parties were neither informed of their wrongdoing nor had an opportunity to have their cases reviewed by an independent authority. The EU countered with a relisting to enforce sanction, while simultaneously inviting the suspects to contact EU authorities to have the grounds for the sanctions explained to them.22 Another case deals with shipping. An EU directive (law) drawn up in the wake of two oil-spill disasters in 1999 and 2002 gives the EU Commission the right to impose criminal sanctions for pollution caused with “intent, recklessly or with serious negligence.”23 Though ship owners interpret this as enabling the criminalization of accidents, the ECJ in 2008 rejected an attempt to overturn the directive. The ruling effectively leaves the EU Commission with the power to set tougher standards (and impose penalties) on pollution in its waters than set out in existing international conventions on shipping.24

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Foreign Aid and Development The EU provides more than six out of every ten public dollars spent globally on humanitarian and development aid—more than the United States and Japan combined—and among individual countries, the Nordic states and the Netherlands top the list. Most aid goes to African nations, where cooperation with regional country organizations, such as the African Union, is well-established, but the Palestinian Authority is the largest (per capita) recipient of EU development assistance. Europe has also abolished or lowered most tariffs on African, Pacific, and Caribbean nations’ products heading for Europe (through the Cotonou Agreement and economic partnership agreements). Individually targeted agreements with immediate neighbors (such as Tunisia, Morocco, Liberia, Ukraine, and Georgia) also enables the EU extends expertise, material, and some monetary assistance in areas ranging from trade, to education, to civil institutions, and the environment. Naturally, aid and favorable trade agreements contain elements of self-interest, while providing the EU negotiating leverage. Improving the health, education, and income levels in poor countries helps stem the recruitment of unemployed and often illiterate nationals by terrorist organizations (Somalia, Kenya, and Yemen are fertile recruitment grounds), while also slowing migration flows to Europe. African businesses must adopt EU standards, for example, on flower production (big in Kenya), furthering European soft power. The EU has also been accused of lowering aid through bookkeeping maneuvers, imposing stringent conditions through trade-for-aid (forcing open African markets to European goods), while doing little to nothing to ensure debt relief, with France and Italy in particular dragging their feet on aid commitments.25 Others point to failures in the Middle East, where the Europeans are having the same problem as Americans balancing their resource-dependence on oil (which requires stable rule to ensure delivery) with promoting democracy.26

International Organizations European states largely vote as a block at the UN and other international organizations, thereby strengthening Europe’s influence.27 Europe’s desire for a strong international agreement stems partly from Europe’s military limitations, but equally important, the Europeans believe the best way to promote and solidify the values of stability, peace, justice, and democracy is through multilateralism (several countries working together). This is not


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a strategy of bowing at the alter of institutional preeminence, but rather trying to resolve conflicts in a cheaper more sustainable fashion, while maximizing legitimacy in the eyes of the world community should military force be needed. There are increasing signs of having to side-step the UN and other organizations. On issues such as stopping Iran’s nuclear weapons program, or loosening the grip of Burma’s military dictatorship (one of the most oppressive in the world), the EU has failed to get backing from more than half of the UN members.28 While the Europeans are not abandoning their commitments to improving the UN, there are limits to what can be done, and the determination to act even absent a UN mandate is recognized in EU treaties. For example, while France was instrumental in pressing for Europe’s adoption of UN resolution 1803 (imposing sanctions on Iran), these accomplished little. Thus the EU, with America’s support, has led separate talks with Iran outside the UN. Though initially successful in halting uranium enrichment (needed for weapons), the European carrots-and-stick approach, help with civilian nuclear power and improved trade relations in return for full inspections of Iran’s nuclear facility, had largely failed by the end of 2009. Both Europe and the United States stand united in seeking harsher sanctions and continued diplomatic efforts to prevent the emergence of a nuclear armed Iran, which, were it to materialize, is seen as the biggest threat to stability and security in the Middle East, and possibly beyond.29

Diplomacy, Norms, and Values Among the strongest powers of the EU is the transformative influence of membership itself. Europeans spent centuries fighting each other over religion, ethnicity, and territory, but the stringent requirements for membership, and the desire to join, have spread stability, democracy, and economic progress unlike any other policy. In the 1970s, authoritarian regimes in Greece, Spain, and Portugal were replaced by democracies eager to join the coveted European club. When totalitarianism in the Soviet Union collapsed, and east Europeans could finally choose their own destinies, people who had suffered oppression chose to pursue freedom and prosperity under west Europeanstyle welfare capitalism.30 The EU in turn provided financial assistance to regions and businesses and expertise to the political elite; all the while private investments flowed into these new countries. Constitutions were rewritten and extensive structural reform implemented. The solidification of democratic principles (human rights, freedom of speech) through new domestic institutions were prerequisites for membership in the EU; after accession east

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European states have aligned security and defense interests with EU states.31 Initially membership in the North Atlantic Treaty Organization (NATO) was a top priority in countries such as Poland, the Czech Republic, and the Baltic states, but NATO’s democratic prerequisites are far less demanding and membership more easily attainable; there was never any doubt as to where the future of economic and social success lay: the EU. East and central European EU members have gradually adopted the emphasis on economic, diplomatic, preventive, and nation building efforts dominating the EU’s international engagements. The desire to join this club continues to spur reforms in Croatia, Turkey, Serbia, Macedonia, and Bosnia, a testament to the strength of the EU’s unique construction and appeal. By 2009, it was evident that the integration of Europe had turned a driving belief into an empirically verifiable conviction: while wars may erupt elsewhere, democracy and interdependence is so strong in the EU that the use of military force against one another is totally inconceivable. The progress achieved in Europe also serves as models for other countries and regions in Latin America, Asia, and even parts of the Middle East, where the goal is to have a free trade area by 2013. EU membership is also advantageous for small states in gaining international recognition, or when pushed around by bigger neighbors. When Russia banned Polish meats for dubious (likely political) reasons, the EU postponed negotiations on a renewed partnership agreement with Russia. During the recession of 2008–2009, the European Central Bank (ECB) and member governments made clear that no country would be allowed to default on their loans, and economic assistance was extended to Latvia and Hungary. The EU is thus greater than the sum of its parts: it has more economic, social, technological, commercial, and political clout than its member states acting individually, and the EU’s global influence is steadily rising. Yet, the EU lacks the ability to back its economic and diplomatic clout with the threat of substantial military projection. So what is being done to improve capabilities and how are have they used?

Europe Lacks Military Power. No, But It Certainly Could Do More Variations Europeans are from Venus, Americans are from Mars. An economic giant but military pygmy. Going to war without France is like going to war without your accordion.32


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Gigantic in size, and mind blowing in its historical and global inclusiveness, the Royal Museum of the Armed Forces and Military History in Brussels is very impressive, to say the least. Spanning 10 centuries of artifacts from wars across the globe, with an aircraft hanger with more military attack aircrafts and transport planes (which you may enter) than most contemporary small countries’ defenses and an impressive array of tanks and other weaponry, the museum is both educational and entertaining. Unfortunately, Europe’s past military muscle, as well as the spectacular panoramic view of Brussels from the museum’s roof, are more impressive than the current state of European military capabilities. Whereas the United States began its military reforms in the 1990s, aimed to create a sleek, mobile, high-tech military, the Europeans dragged their feet. When the civil war in the former Yugoslavia erupted in 1992, European nations stood idly by, and the United States brokered the 1995 peace agreement (in Dayton, OH). In 1999, it was again the Americans who took the lead, through NATO, to stop the atrocious Serbian onslaught in Kosovo. Britain, France, and few others joined in the air assault, but without American involvement, the Serbian onslaught would have continued. The month-long bombing campaign stopped Milosevic, saving an estimated 200,000, mostly Muslims, and again shaming Europe.33 However, unlike in 1992, Britain by 1999 was pragmatic, pro-European Prime Minister Tony Blair, who was eagerly seeking an issue on which Britain could lead and shape European policy; preferably, where Britain was a formidable force. Defense policy was this policy area. By reversing Britain’s 40-year opposition to any type of European defense cooperation, and emphatically insisting that EU states urgently improve military capabilities, Blair initiated an EU-wide capacity-enhancing reform process. France was wholly supportive to this process. Although NATO would remain the preeminent military organization in Europe, the EU at times needs to act on its own, and to this effect the union “must have the capacity for autonomous action, backed up by credible military forces, the means to decide to use them and the willingness to do so.”34 By 2001 this new-found political will had resulted in permanent security and defense institutions, signaling to the United States and other countries that the EU was now serious.35 Thus began the European Security and Defense Policy (ESDP), a practical, capability-building enterprise. There is now an EU security strategy (ESS), a foreign affairs representative, a defense agency, civil-military planning cell, as well as a strategic research institute and a defense college. The EU is developing capabilities to deal with many of the situations where the Americans either have no interest to act, or are less suitable (e.g., nation building, peacekeeping, police operations). All countries retain ultimate

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control over their armed forces, but countries pledge assets (tanks, troops, planes, helicopters, etc.) to EU operations, which are also funded by member states. Increasingly, EU projects are replacing national counterparts (e.g., in armaments production), or enabling a reorganization away from a total national defense to countries specializing in certain areas (e.g., the Czech Republic’s focus on dealing with chemical and biological weapons). Transnational 1,500-troop rapid deployment battalions set up by member states (Swedish-Finnish-Austrian, German-French, GermanDutch-Polish, Spanish-Italian, etc.) are also seen as vital for future EU operations, even if, largely due to a lack of political will, they have yet (as of January 2010) to be deployed to conflict zones. Although this raises concerns about Europe’s willingness to engage militarily, a significant number of European soldiers and transnational teams have been deployed to Congo, Afghanistan, and elsewhere. As Europe’s foreign policies mature and defense markets integrate, we will likely see both EU battle groups and ad-hoc coalitions of the “willing and able” deployed abroad. Slightly off to the northwest of central Brussels, but within walking distance of the parliament and the Commission, is the EU military headquarters. An inconspicuous multistory office building, albeit with extensive security measures, serves as the daily workplace for stationed military and civilian staff from all EU member states. Divided into committees, strategy is discussed and reforms proposed, and slowly, a common European military culture is emerging.36 Britain and France, the only two European countries with global reach and extensive experience, remain the most influential in setting the EU’s military organizational direction, with the understanding that European forces and equipment should be compatible with American (which is not the case in most areas, such as night vision or communication technology). In regard to peace keeping and nation building, as well as vital niche capabilities such as mine-sweeping, policies are shaped by countries with international experience and excellent reputations, such as Finland and Sweden.37 Britain and France have most, albeit limited, capacity for air and sealift, to get troops and equipment to where they are needed. Several European countries lease planes from Ukraine and Russia, but a European development and procurement program for a large scale transport plane, the A-400M, will significantly improve lift capabilities from 2012.38 Skyrocketing defense-related costs, budget deficits, and competition from the United States have made joint programs, “defense economies of scale,” necessary. Acquiring the entire range of capabilities required for a holistic defense is unrealistic for all but a few EU members (Britain, France, Germany), therefore, states now increasingly pursue multinational projects under the guidance of a European Armaments Agency. Aside from


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airlift, other projects include a European Strike Fighter (Typhoon), the Joint Strike Fighter with the United States, and the Euromissile. Britain, France, Germany, Italy, and Sweden are among the world’s 10 largest arms suppliers. Along with Spain they account for more than 95 percent of European defense industry jobs and production, and nearly all exports. These six have signed a treaty to further European cooperation and to guide common research and development, standardization of technical specifications and military equipment, harmonization of export procedures, and standards for security and classified information.39 Five of the same countries (excluding Sweden) established the Organization for Joint Cooperation on Armaments (OCCAR) with legal standing to promote further defense procurement, as well as sign and manage contracts for all members. There is also an all-European Code of Conduct for weapons exports, which includes a ban on sales to countries at war. In December 2008, the six large European defense producing nations convinced all EU members to collaborate on the next generation naval minesweepers, to create new funds for defense research and technology, develop a European of maritime surveillance system (including a new unmanned air drone), and to expand staff college exchanges.40 Individually, countries are also improving their capabilities, especially France. President Sarkozy is focusing on quality, mobility, technology, and rapid deployment forces, while cutting the department’s administrative staff 15 percent by 2013.41 The defense equipment budget rose by one-fifth in 2009, and its improved satellite technology, 650 additional armed vehicles, 6 nuclear submarines, 300 nuclear warheads, and more amphibious command ships, ensures France will remain a formidable military power. France is opening a base in the Middle East, and it is back in NATO’s military core, assuming command of NATO’s Norfolk, Virginia, Headquarters for Transformation. Britain has the fourth largest military budget in the world and is second only to the United States in research and development of military science, engineering, and technology.42 The 3 military branches have 190,000 active personnel, and the second-largest deployment of navy ships. Britain’s ties to the United States provide privileged political access to American intelligence and commercial access to lucrative defense market. However, its commitments to be a world force alongside the United States are not matched with resources. Its military is organized to fight one large scale war, or two medium-size conflicts lasting no longer than six months, and prolonged deployments to Iraq and Afghanistan have exposed severe shortages of combat ready troops, advanced personal gear for urban warfare, as well as a lack of sufficient helicopters, engineers, and medics. The next defense review in 2010 will necessarily result in either reduced overall

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commitments (politically difficult), increased defense spending (unlikely given severe budget constraints until 2014), or an expansion of pooled and joint projects with other European states (most likely scenario). Political cover for integrating ever larger sectors of defense comes from three sources. First, there is consistently stronger public support for common foreign, security, and defense policies (including the fight against terrorism) than for any other policy area bar science research.43 Concurrently, there is even stronger public opposition across the continent to increase defense spending. The combination of these two factors, along with strong American backing for greater European defense capabilities, makes it widely acceptable European citizens to cooperate intensely and integrate where possible, defense procurement, development, and operations.

Where Perceptions Are Correct While the British and French are increasing defense procurement, European investments still total only half of American spending on material, operations, and management; and Europe spends much less of its defense budgets on military research and technology development. Although some experts argue that massive waste and duplication inflates American defense budgets, and that its focus on extravagant, high-tech weaponry, does not guarantee an advantage in all situations, European leaders and military experts acknowledge that waste and duplication is at least as big of a problem in Europe.44 Most EU forces remain static, geared for territorial defense in a time when rapid deployment abroad in preventive operations is crucial, and too many personnel are simply lounging about collecting pay. National governments, such as American states, remain too protective of domestic jobs; a dozen European manufacturers of military clothing, eight different tanks, and seven different infantry fighting vehicles—the redundancies are massive. The gap in military capabilities between the United States and Europe has grown so big that in some places battlefield communication has become difficult, highlighting the urgency of much needed European improvements. Targeted funding for operations and improved readiness and availability of troops and civilians for ESDP operations are two glaring deficiencies.45 A quarter of global military expenditures (second only to the United States at twice that sum) should be sufficient to create strong militaries if redundancies and bureaucratic overhead were cut; so reforms notwithstanding, more can be done. So much improvement is needed, but the Europeans are still engaged to a much larger extent than one might believe listening to the news in the United States.


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The Europeans Are Pacifists. Ssshhh . . . Don’t Tell the Fighting French, British, Polish, Dutch, Italian, Danish, Czech . . . Variations The European Union could not fight its way out of a wet paper bag. Europe [believes] in peace through negotiation and, in some cases, appeasement. . . . it’s Europeans who are naive, superficial and materialistic. “Europeans are pacifist and refuse to use military force.46

After 9/11 European sympathy knew no borders. Piles of flowers were placed in front of US embassies in every capital; there were concerts in Berlin, and a continent-wide three minutes of silence. The European members of the NATO, led by France, invoked the alliance’s mutual defense clause where an attack on one constitutes an attack on all. European pilots flew surveillance planes over New York, national leaders supported the American invasion of Afghanistan, and after initially being joined only by the British, other Europeans countries soon joined the fight on the ground.47 In 2002, the American-led war in Afghanistan enjoyed very strong public approval in Europe’s four largest countries. European approval of President Bush’s Middle East initiatives and foreign aid policies surpassed the president’s domestic polls figures.48 Afghanistan notwithstanding, by 2003 chiding and ridicule was filling the American press as several European countries refused to join the military effort. The Bush administration referred to these as “old” Europe, who failed to recognize the dangers in a post-9/11 world, while those who “saw the light” and followed the United States to Baghdad constituted “new” and modern Europe (the British, Dutch, Spanish, Danes, and half a dozen central and east European nations). Having recently experienced totalitarian oppression, and now seeking full recognition as good Western-style democracies standing up for freedom, seven countries— Estonia, Latvia, Lithuania, Slovakia, Slovenia, Bulgaria, and Romania— supported the invasion in an open letter, stating that “The trans-Atlantic community . . . must stand together to face the threat posed by the nexus of terrorism and dictators with weapons of mass destruction,” and that Iraq was “in material breach” of Security Council Resolution 1441.49 Public approval of American policies were also higher in the east than in western Europe, providing ample political cover for governments, even as several other countries, particularly France and Germany, opposed contemplating

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military action until the final reports on the inspections of Iraq’s nuclear facilities had been submitted by the International Atomic Energy Agency. Though the reasons for the invasion of Iraq is water under the bridge in 2010, the 2003 schism is important because it shows that even severe differences can be overcome in transatlantic relations. Policy differences should be expected while close ties are retained; it deserves remembering that except for the 2003 invasion, the Europeans have stood united with the United States on every major use of force dating back to the 1991 Gulf War. By 2005 mounting death tolls, escalating costs, and problems with security and nation building changed the rhetoric emanating from the second Bush administration. European help with reconstruction and police training was now welcomed, and the EU spent tens of millions housing, feeding, and hosting fleeing Iraqis in Jordan, Syria, and inside Iraq, and has accepted more than 30,000 Iraqi refugees.50 European troop contributions to Afghanistan also increased in 2008 and 2009. Britain has made the largest contributions to Iraq (peaking at 46,000 personnel in 2003–2004) and Afghanistan (more than 8,000 troops and more than 200 casualties as of July 2009). These deployments have stretched forces to their limits by having longer deployments and shorter time at home than required by British military standards, thus leaving little room for further contributions over the coming years, even as British public support for the Afghanistan effort rose between 2006 and 2009.51 By fall 2009, 29,000 European soldiers were deployed to Afghanistan as part of the 60,000 strong NATO force (which includes Americans), up 50 percent from 2006. Relative to their populations, the Danes and Dutch have made the largest contributions to complex combat operations while in absolute numbers the Brits contribute the most (see table 7.2). European leaders have repeatedly declared that defeating the Taliban and al Qaeda is important to European security, that attacks on Europe may ensue if the Taliban and al Qaeda are allowed to operate in Afghanistan and Pakistan, while pointing to numerous arrests and foiled plots in Europe.52 However, European leaders have failed dismally to convince their citizens of the purpose of fighting in Afghanistan, thus diminishing the likelihood that it will be politically feasible to commit more European forces, or even maintain current force levels. Another problem is the “caveats” placed on German force contributions by their political leaders, including where troops can go, as well as when and how they can engage the enemy. Naturally this frustrates and complicates the military efforts on the ground.53 So, although the United States welcomes European combat troops, they are increasingly pushing harder for funds to train and expand the Afghan national army, police force, and civil society; this is more politically palatable to most Europeans, especially as death tolls (per capita)


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have been high for Europeans (and Canadians). This mix of peacekeeping, training of local civilians and police, and civilian reconstruction— which Europeans do well—will likely remain the primary contributions by the Europeans in Afghanistan. From 2007 to June 2010, the EU operated a police operation in Afghanistan with 400 personnel mainly police, law enforcement, and justice experts deployed in the capital Kabul and certain regions. The main goal was “the establishment of sustainable and effective civil policing arrangements that will ensure appropriate interaction with the wider criminal justice system under Afghan ownership.”54

So What Is Europe Doing Independently? In the decade following NATO’s Kosovo operation, the Europeans (under NATO command) provided 80 percent of the peacekeeping troops and paid for 90 percent of reconstruction. The EU took control from NATO in 2009, and began its largest ever foreign civilian operation, sending 2,000 lawyers, police, judges, and civilian advisers to basically build the young country’s entire governmental, legal, and administrative structures. Most of the world’s peacekeeping and police forces outside of Iraq are either funded or staffed by Europeans, be it in Lebanon, Sierra Leone, the Ivory Coast, Kosovo, Bosnia, or Afghanistan, including those under UN administration. Since 2003, the EU has launched 21 of its own operations (military, civilian, or combined) on 3 continents. The Balkan region has seen a total of six missions, three of which had been successfully concluded by 2009. The EU’s first two operations were in Bosnia-Herzegovina and the Former Yugoslav Republic of Macedonia (FYROM). Operation Althea in Bosnia-Herzegovina initially included 7,000 troops and support personnel, with 2,000 remaining as of June 2009, along with a 500-strong police unit, training and assisting Bosnian police officers.55 Exemplifying its global reach, the EU has also conducted operations in Asia (Aceh, Indonesia), in the Middle East (the Palestinian territories and the Rafah border crossing point), and various places in Africa (including Chad, and twice in the Democratic Republic of the Congo). For example, in 2003 Europe sent 1,800 personnel to help stabilize Bunia, in the Democratic Republic of the Congo; three years later 1,500 troops provided security during the country’s elections. Though small compared to operations in Iraq or Afghanistan, all these operations signal a European willingness to act and not just discuss, negotiate, and provide financial assistance. The European states are increasingly willing to use common resources and engage in conflict areas to prevent states from collapsing and to further

136 Table 7.2

America’s Perceptions of Europe Troops deployments and opinions on use of force

Country

Britain France Germany Italy Poland Spain Sweden European Troops United States

Troops in Troops deployed The use of military Afghanistan, in military, force to maintain July 2009 peace-keeping, global order is (rounded numbers) or monitoring sometimes necessary operations (% of public that globally 2008 agree 2007) (rounded) 9,000 3,160 4,050 2,800 2,000 780 430 29,000 57,000

30,000 13,000 8,700 8,600 4,200 2,700 840 123,000 (2003) 290,000

67 77 41 73 56 65 77 n.a. 77

Sources: North Atlantic Treaty Organization, “International Security Assistance Force and Afghan National Army Strength & Laydown,” http://www.nato.int/isaf/docu/epub/pdf/placemat.pdf. The exact statement in the Pew poll was: “It is sometimes necessary to use military force to maintain order in the world,” respondents who completely agree and mostly agree are combined in the table. “World Publics Welcome Trade – But Not Immigration,” October 4, 2007, Pew Research Center’s Global Attitudes Project; Jean-Yves Haine, “Force structures,” (Brussels: European Union Institute for Security Studies, 2004), p. 2.

stability and democracy, especially in areas where the United States has no interest of engaging.

International Terrorism The probability of a European or American falling victim to international terrorism is minuscule. Since 2001, 75 percent of major attacks have occurred in Iraq, Pakistan, and Afghanistan, with India, Russia, and the Middle East, being other hot spots.56 That said, statistical probability matters little if faced with another 9/11-type attack, whether homegrown or transnational. The ESS includes terrorism as one of five key threats to European and global security (weapons of mass destruction, regional conflicts, state failure, and organized crime are the others); the


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EU Commission also includes antiterrorism clauses in agreements with other countries and provides monetary assistance explicitly for fighting terrorism.57 As part of European efforts to prevent the spread of terrorism, EU countries train other countries’ soldiers, police, and legal staff in counterterrorism; Pakistan, Georgia, and Iraq (where 800 European judges and police train their counterparts) being among the first recipients. The EU also launched its first-ever naval mission in December 2008, targeting pirates off the coast of Somalia. Under robust rules of engagement, allowing the boarding, arrest, and detention of anyone suspected of piracy, prosecution was allowed in any EU state or in Kenya (who signed an agreement in May 2009). The EU operation is part of a larger engagement to help rebuild Somalia, including €215 million between 2008 and 2013 for governance, education, and rural development, while in the process stemming the recruitment of new terrorists.58 The European intelligence services have thwarted several plots in Europe since 2004, but the EU’s antiterrorism chief said in September 2009 that Europe remains at risk of attacks by radical Islamists.59 The global nature of recruitment, training, and plotting terrorist attacks necessitates transatlantic cooperation, and despite the malicious, and often incendiary, public spat over the invasion of Iraq, transatlantic counterterrorism cooperation, particularly between French, American, and British authorities, deepened from 2003 forward. Europeans still argue terrorism is a social problem requiring long-term efforts, but Europeans now recognize that war can occur between a country and an organized group (e.g., al Qaeda), while the United States has admitted that the use force is only one component, and not always the most effective one, in addressing terrorist threats or defeating insurgents.60 Security personnel on both sides have lauded cooperative efforts. France has processed numerous United States’ requests for information, and intelligence and security officials continue to actively investigate and prosecute cases of extremism; in 2007, its judiciary convicted five French former Guantanamo detainees on terrorism charges. German authorities admitted to having foiled at least six major terrorist plots up through July 2009, all of which included transnational intelligence sharing.61 Europe assisted American covert operations, airlifts of detained suspects, and the operation of secret detention centers, all of which contradicted official statements, at times even EU laws.62 Monitoring and closing financial institutions to prevent money laundering to finance terrorism, regulating cash at border crossings, and operating a lost passport center in Lyon with the United States are other European engagements the US government acknowledged in 2009 are critically important and effective, “Steps taken by European governments . . . and ongoing counterterrorism relationships

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with European countries have had a direct and positive impact on the security of the continental United States and our interests overseas. We cooperate closely on law enforcement, cyber security, intelligence gathering and information exchange, as well as on international transport security and border control.”63 The EU and the United States are closer than ever in their views of how to address the threat of terrorism, with some suggesting a joint declaration of intent and strategy.64

Concluding Commentary and Summary In May 2009, I attended a presentation in Brussels on the topic of engagement in Afghanistan and Pakistan, organized by the Carnegie Endowment’s Brussels chapter. On the panel, and among the attendees, were representatives from all the major international governments, organizations, and nongovernmental stakeholders. After the usual debate over the value of guns versus schools (military versus civilian projects), I asked a panelist with extensive experience traveling and working in Afghanistan, whose continued insistence that winning people’s trust was at the heart of the matter I did not dispute, but, I asked, how we could possibly engage in reconstruction and gain people’s confidence with bullets flying and bombs going off? Was not stopping such attacks a prerequisite? He quickly acknowledged as much, admitting that some forces were necessary, before returning to his insistence that all would be well if only enough money and civilians were sent in. Déjà vu I thought. This eerily familiar exchange reminds us of a true difference among the majority of Europeans and Americans on the willingness to counter evil solely with brute force. But the aforementioned exchange also highlights the complimentary nature of the transatlantic relationship. The Americans can still win wars like no other nation in history; Europeans do better at peacekeeping, crisis operations, and nation building. Human rights, democracy, peace, and the rule of law are the values Europeans themselves associate with the EU, primarily because the continent responsible for both world wars has been transformed in a remarkably short time from a source of global instability to a disseminator of stability and prosperity. It is hardly surprising to find high levels of support for common foreign policies aimed at promoting and securing such values.65 Notwithstanding major problems discussed earlier, the rapid development of EU security and defense capabilities, replacing rhetoric with improved capabilities, common institutions, and action in a policy area historically deemed the sacred domain of states, is itself impressive.66 But there is little support


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for increased defense spending, so cooperation, efficiency, and effectiveness remain central to future European efforts. Europeans have keenly understood the new and diverse nature of threats facing citizens while embracing and strengthening multiple sources of power in an interconnected world. Remember, no military force was needed to convert ten European former communist states into stable democracies. No air raids dropped new chemical disclosure regulations on companies in Washington DC, Dallas, and across the globe. But there is a limit to soft power. Europeans recognize that military power remains an essential source of influence and intimidation in a world where certain groups, and some countries, seek to spread death and destruction abroad. Europe is strong enough militarily to constructively promote security and stability in many parts of the world, yet is too weak to sort out all of the world’s problems, and diplomacy cannot prevent or stop all evil, as discussed in the beginning of this chapter. Thus, however much both Europe and the United States decry the other’s weaknesses, their respective strengths complement each other.

Recommended Readings and Web sites 1. John McCormick, The European Superpower (New York: Palgrave Macmillan, 2005). 2. Leif Johan Eliasson, “Regional Defense Policy: The European Security and Defense Policy,” In Handbook on Military Administration, edited by Jeffrey A. Weber and Leif Johan Eliasson (Bocan: Taylor and Francis CRC Press December 2007), chap. 16. 3. European Union, 50 Years of EU in the World, EUtube, video, posted June 2007, http://www.youtube.com/user/eutube#play/user/076DFAC291E71024/ 20/95CuBI-BL4E. 4. European Union, EU in Afghanistan, EUtube, video, posted June 2, 2008, http://www.youtube.com/watch?v=kavxjiCVXoU&feature= channel_page.


Chapter 8 Kant and Uncle Sam: Competition, Coordination, and Cooperation

The Young Giant That Could Is Here to Stay and Doing Well We saw in chapter 2 the enormity of the economic colossus that is the European Union (EU), a $15 trillion dollar giant. We saw in chapters 4 and 5 how most Europeans are competitive and technologically advanced, but also pay higher taxes and accept a larger role for government in providing social programs, to a certain extent confirming American’s perceptions. Yet, to claim that Europe is Socialist is akin to arguing that the intelligently written, very funny, but decidedly satiric, Colbert Report constitutes the only serious in-depth news reporting on American television. Correcting American perceptions, chapter 6 shows that cradle-to-grave security is gone, but also that most Europeans are healthier and enjoy the same choice of doctors as Americans; all at lower costs. The chapter also touched on how reformed European social models are converging, while chapter 7 addressed beliefs surrounding Europe’s unwillingness to use military force, and why it therefore lacks international clout. Numerous examples were provided of how the EU influences the rest of the world through aid, trade, diplomacy, business standards, and even military involvement. No doubt America remains a preeminent player in the global arena, but this richly endowed

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country, blessed with an enviable abundance of natural resources and talented citizens, can no longer dictate international developments as it pleases. While Europe is not a nation-state with a unified foreign policy and military, it is far stronger and more influential than humorist P. J. O’Rourke could possibly have imagined when, in 1986, he penned his sarcastic depiction of “Euro-Weenies,” living in “dopey little countries with pokey borders.”1 In July 2009 the cover article of the leading US foreign affairs magazine, Foreign Policy, read “Bamboozed Don’t Believe the Asia Hype,” about the continued power of the West and much exaggerated Chinese growth and innovation. The Financial Times had “Sweden defends private equity,” explaining how the country opposes stricter rules on private investors and hedge funds (private investment funds with few reporting requirements and little transparency, Europe and United States have 84 percent of the global market). Finally, in late August articles abound declaring that France and Germany had emerged from the recession, with Italy and Britain soon to follow.2 All of them exemplify, in different ways, what this book has shown: that Europe is economically and socially stronger than many Americans believe. Europe has done what America usually does: complain and gripe publicly about the fear of change, while simultaneously undertaking real reform when necessary. In the 1970s Britain was a basket case, run down by the tax-happy union-beholden Labor party. Conservative leader Mrs. Margaret Thatcher swept into power, eased business restrictions, and restored growth. A reinvented Labor party under the stewardship of Tony Blair saw Britain rise to the international financial apex, regaining some of its global influence. Germany endured the incredibly high cost of reunification throughout the 1990s, followed by domestically painful labor reforms, all to retain its prominence as the global export champion and a driver of European economic growth. The heavy-handed, bureaucratic, state run Sweden of 1985 had by 2009 become a globally integrated, high-tech hub of research, with government defending private capital. The agriculture-dominated and poor Ireland of 1987 embraced technology and rose to become one of the richest, most hightech countries on the planet two decades later. Other examples abound (Finland, Slovenia, Estonia). Conservative and similar right-of-center parties dominated Europe by 2009, and in the face of recession-induced pressure to pour in stimulus money, most countries, whether governed by the political left or right, acted more cautiously to contain rising debt than either America or Japan. Notwithstanding Greece and Italy, Europe of 2010 is economically and socially very different, more responsible, than Europe of 1990.

Kant and Uncle Sam: Cooperate and Compete

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With Clearer Heads and Cleaner Lenses. What Might We Learn, and What’s Going out with the Garbage? Competitiveness and Taxes In addition to annual presidential and other high-level meetings, numerous think tanks and scholarly exchanges, the Transatlantic Economic Council was erected in 2007 to establish a close, potentially integrated, economic area between Europe and the United States. Issues under consideration include reforming or eliminating barriers to trade, the implementation of EU and US standards and law in respective area to maximize cooperation, promote healthy competition and economic gains, and minimize disruption (e.g., accounting standards, poultry, beef, aviation, or beauty products when implementing new chemical regulations).3 The transatlantic relationship is thus maturing and integrating, converging on norms and regulations. Why then is Europe doing well, and even better than the United States, in competing with the up and coming China? Again, by doing what Americans have done best: adapt and lead. Americans are still told from young age that they live in the best country in the world, that others are envious of what they have, and that they can do anything they want because all the best schools and technology are available in the good ol’ USA. I have spent numerous hours listening to middle and high-school students, as well as college freshmen, recite how America is superior in all areas and that others are envious of all we have. By the time youngsters begin high school, let alone college, they too have joined their elders in believing that if someone somewhere else is producing a better car or TV, a more sophisticated phone or plane, or carrying out new life-saving surgery, they must in some way be cheating. The American labor unions promulgate their favorite mantra of being able to compete with anyone as long as the playing field is level, only to thereafter espouse a million excuses for why other countries’ workers frequently outperform America’s, including poor countries’ dismal labor standards. Conservative pundits blame foreign governments’ currency manipulation or industrial subsidies, while proclaiming lower American taxes as the solution to all ills; this should be as convincing as Rush Limbaugh suddenly pronouncing Jimmy Carter and Jacques Chirac to have been the best American and French presidents ever. To crown the blame-game, huge swats from all ideological factions in the country whose wealth and prosperity stems from the free flow of goods, services, and ideas happily join in a national

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kumbaya of self-defeating folly called protectionism (see chapter 2). No need to look oneself in the mirror, no need for self-examination of the education, labor, or welfare system; there is nothing we can learn from others, we are just fine. It is regrettable that public rhetoric in a nation whose optimism and can-do spirit created a country that was the envy of the world for much of the twentieth century has succumbed to blame game worthy only of a kindergarten recess. Most European countries, and the northern ones in particular, have succeeded in part by emulating America’s strengths, while, and this is crucial, avoiding its failings; by substituting rigorous curriculum for feel-good education standards, while embracing globalization, openness, and adaptability as the twenty-first-century way of life. Recognizing that countries around the world transition through different stages of development, and naturally utilize their comparative advantage (whether it be labor, natural resource, technology, or a combination) the same way contemporary developed countries did as they rose to material affluence, the successful nations of today are not asking, “how are others cheating?,” but rather the quintessential American question, “what can we do to improve our competitiveness and prosperity?” German companies endure higher social taxes and wage costs, but lower insurance and health care expenditures. Their total business costs are not very different from their main competitors’ in the United States, Japan, or Australia; and the quality of employees are also very similar. They compete under rules agreed in the EU, and nationally by employers and employees. Ponder the following. In America, we have a large national business sector that reaches well more than half of the population regularly, and where, even if a company attracts more customers than their competitors, provides better products, and outperforms the competition financially, the business must share revenue with its competitors; it is prevented from freely setting salaries commensurate with demand, and, if they still manage to be the best company in a given year, then they are “rewarded” with a ban on new hiring until all others have had a chance to snap up unemployed talent. What, you may ask, is this crazy, Marxist-like, creation that should immediately be expunged from our territory to make room for the salvation of free-market capitalism? The answer is professional sports: football, basketball, and hockey. How many readers see these as “un-American?” If we can accept restrictions aimed at containing costs and ensuring fair competition in sports, a system within which everyone competes and audiences choose their favorite teams, how can we not accept the same in essential services such as health care? As it currently stands European soccer is more capitalist than American football, and European health care—all moral arguments aside—is cheaper and more efficient than the American version.


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The point here is that Western capitalism often defines competition as free if the rules, however costly, are transparent, adhered to by all participants, and enforced equally by the legal system. Modern European countries business sectors increasingly resemble the incentive-based American model, while the United States has adopted more European-style, government involvement, than we often care to acknowledge, and both sides can learn from each other.4 Following the Europeans in lowering corporate taxes, removing the burden of health care costs from American business (which is eight times more costly for an American automobile manufacturer such as Ford than for BMW, Fiat, or Peugeot), while improving the delivery system of social programs (means-testing, extended unemployment benefits) would surely help American competitiveness. Tougher high school curriculum to prepare students for vocational training or college is also essential. I have listened to numerous high school teachers complain about disorderly and unfocused students, crammed 35 or 40 to a class; naturally class size and the ability of an instructor to keep teenagers focused are mutually reinforcing. At the college level, we see the results in the increased need for remedial English and math, and by having to teach in introductory courses what should be taught in high school. For example, my colleague found the 2006 edition of the American government high school text he used in the 1970s too difficult for his freshmen; similar stories abound. Reading this you are probably thinking there are thousands of bright, talented, Bill Gates, Warren Buffets, and brain surgeons to-be across America, and you are correct. But young wizards’ enthusiasm fade when not challenged, when prevailing norms reflect declining standards. American high school students score lower than half of their European peers on international student assessment tests in math, reading, and particularly science (Finland, England, and Hungary do best in science).5 If this trend continues, well-paying jobs will be lost to more competitive environments. American universities have traditionally been magnates for the brightest students and faculty from across the globe. Half of science graduate students at American universities are now foreigners, which is of little concern as long as they stay and work in the United States upon graduation. However, an increasing number are finding better paying jobs elsewhere, lending their talent to other markets, which over time leads to better universities being established overseas. There are not enough American students interested in science to fill domestic gaps, and while Europe has similar problems, it now appears more open to attracting skilled labor than America. There will be higher demand for, but shortage of, highly skilled information technology and engineering workers until at least 2020,

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so European governments now place even great emphasis on information and communication technology, the new European Institutes of Technology is a primary example of a European-wide concerted effort to encourage innovation and development.6 Most European start-ups struggle to find venture capital, they also face more business bureaucracy, and have higher first-decade mortality rates than do American firms, but university-business research hubs to improve innovation, research, business, and competitiveness are popping up across Europe, with good results. Investments are flowing in, and businesses are benefitting from more American-inspired, business friendly, bankruptcy laws. Regarding small business regulations, it is clear that Europe is emulating the United States to improve competitiveness. Fiscal responsibility matters. Excluding the profligate British, 12 European countries led the Germans and Dutch and including economic “bad boys” Italy and Greece save more of their earnings than do Americans, leaving them better able to weather downturns. This provides greater purchasing power without racking up debt and helps explain why although seemingly overtaxed and underpaid, they import lots from America. American exports bound for Europe rose 60 percent from 2003 to 2007, and it is not 60 cent rubber ducks in these shipments; rather, highvalue goods such as transportation equipment, chemicals, and computers topped the list!7 Many European countries have lower annual deficits (i.e., expenses exceed revenue in a given year) than the United States and also more realistic assumptions of economic growth over the next decade; some economists fear America’s upwardly spiraling national debt will severely hamper competitiveness and cause higher interest rates on everything from government borrowing to mortgages and student loans.8 True, Latvia, Ireland, Greece, Portugal, and Great Britain will suffer severe budget problems until at least 2014, but American states such as New Jersey, New York, and California (with roughly the same combined population) also suffer humongous deficits, all in addition to our country’s federal debt. Although the EU’s combined economy is larger than America’s, Europe’s combined budget deficits were lower in 2009 and 2010. However, large budget deficits are unsustainable anywhere as they lead to rising national debt. In 2009–2010 the Europeans announced austerity budgets to counter rising debt level, a process aided by Europeans’ generally high rates of private savings (much higher than Americans’) and, except for Britain, low private credit-based debt. By January 2010 it was clear that projected multiyear, trillion dollar, federal deficits will push total American national debt toward 100 percent of gross domestic product (GDP) by 2012; add state, local, and personal debt and the


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sum is nearly three times America’s annual GDP. Both Americans and Europeans will have to endure both tax increases and spending cuts; yet European citizens will still have health care and schooling for all citizens, while their American peers may not. European trouble spots include Greece, a laggard in information society, financial liberalization, and sustainable development, and Italy and Bulgaria, where corruption remains the major concern. Italy and Greece also have huge national debts and low birth rates, leaving the country of Parma ham and the cradle of democracy the closest we have to “sclerotic” western European states. Then again, here in American the states of Louisiana, Illinois, and New Jersey can give the Europeans a run for their money.9 Transatlantic cooperation in combating counterfeiting, tax evasion, bribery, and money laundering is crucial and expanding.10 A 2008 EU and US intellectual property rights enforcement operation resulted in the seizure of 360,000 counterfeit integrated circuits with least 40 different trademarks. In 2009, America and the major European states forced open Luxembourg’s, Lichtenstein’s, and Switzerland’s bank secrecy laws. In today’s global economy, where nanosecond transactions zip across the globe, you can be prosecuted in any country that is part of a transaction, even if the actual crime occurs elsewhere in the chain. European and American antitrust agencies are working ever more closely to increase the effectiveness of their common enforcement tasks.11 Settlements and penalties for individuals and companies investigated and charged with bribery or other corruption rose more than 100 times in just 6 years (2002–2008), and most of that thanks to transatlantic cooperation.12

Technology Transatlantic interests pertain to technologies as well. The engine of much new and existing business depends in different ways on high-tech components and gadgets in nanoform, as in iPods, laptops, or magnets in automobile manufacturing, wind-turbines, or solar cells. These all depend on access to rare-earth metals, 97 percent of which are in China. This means Europe and the United States may be exchanging dependency on Middle Eastern oil (or rather, the 17–20 percent of oil they get from there) for Chinese metals. This is an area where intense cooperation and joint political, economic, and military pressure against an authoritarian-led monopoly that threatens to hamstring both economies is critically important. The United States uses harsh rhetoric with pragmatic, yet precarious economic policy (China owns a quarter of US foreign-owned debt), while Europe is more accommodating in words and actions, seeing that Europe is less

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beholden to Chinese foreign economic adventures. A transatlantic plan of action may be essential to our future businesses and overall well-being. Throughout Europe cell phones are cheap, ubiquitous, and cuttingedge—the same applies to Internet access. Estonia, Finland, Sweden, and others have most government services online and available to all citizens. Though getting better, American federal, state, and local governments could learn a thing or two about information access and Web page organization from their European counterparts. The costly patent system in Europe (chapter 5) is definitely nothing to envy. Years of political concerns and business pleas to improve competitiveness has led to no more than an agreement to use a common language in applying for patents. A one-stop-shop to approve and enforce a Europeanwide patent would lower costs by half. Naturally, the entire European process applies to American firms operating in Europe, so they would benefit as well. Despite these problems, a third of global technology and electronics patents are European, proving that innovation is not lacking. The latter extends to the environment as well. Norway has a 10-year project of catching carbon emissions from factories and sinking it into deep-sea depositories, soon to be expanded in Britain. Europe has extensive experience with cap-and-trade initiatives aimed at lowering green house gas emissions and has addressed problems such as deciding which sectors to include or excessive distributions of permits. Twenty-seven American states in 2009, with more to follow, are involved in some form of regional trading scheme, so American and European experiences can be mutually beneficial in improving effectiveness, thereby setting global standards. Respondents in the College Survey 2009 confirm what other national studies show: that younger Americans do not think others, in this case Europe, are obsessed with environmental protection, but rather that such concerns should be part of regular political debates.

Social and Cultural Areas Even though entitlement reforms have swept the European continent, transfer programs (e.g., taxes, tax breaks, housing, and welfare assistance) still leave people at the bottom, the poorest and the “working poor,” better off in Germany or Denmark, than in Alabama or Tennessee.13 Europeans are convinced that social assistance programs help stave off many social ills, and since European welfare systems were institutionalized before the continent became as racially diverse as the United States, and before the globalized economy took off, they are far less likely to be dismantled in the face of economic turbulence or massive immigration. During the


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2008–2009 recession, when more people needed help with housing, child care, and education loans, no one was thrown out on the street or forced into bankruptcy because they needed a kidney but lacked insurance. American unemployment in 2009 was higher than the European average, and roughly 25 million American citizens were using food stamps. It is worth pondering how the Danes, and others, combine a flexible, easyhire-easy-fire job market—ranked as competitive as the American—with extensive social safety nets; and the Danes are happy. At the same time critics are wrong who dismiss the American welfare system as a mere skeleton, where individualism reigns supreme and inequality and poverty abound. Three European scholars actually argue that US public assistance is far more extensive than commonly believed even among Americans, and that the United States does not have greater inequality than Europe as a whole (excluding Scandinavian, the Netherlands, and Germany), because compared with Europe, the United States may be the true social democracy these days, a social democracy founded on liberal access to credit, on a national Social Security system, and since 1994 on a rapidly expanding Earned Income Tax Credit that has bolstered real earnings of lower income Americans and may therefore have played a critical role in lowering unemployment . . . Europe must establish . . . the kind of social welfare transfer and employment subsidy mechanisms that have heretofore existed only within the smallest, richest, and most resolutely socialist nations of the continent -but that are entirely routine in the United States.14

Transfers from richer states (mostly northern) to poorer states (mostly southern) fund public programs such as schools and social services. Federal and states programs such as food stamps, subsidies for heating costs, and medical care for the elderly, the poor, and most children have increased; like it or not, this is American-style of big government. There are hundreds of millions of dollars available in private and public education low-interest loans and scholarships; tax-paying home owners are allowed extensive mortgage interest deductions, and charitable contributions are tax exempt. The latter contributes to America’s extensive nongovernmental sector with charitable and volunteer groups who provide social services for the needy at low administrative costs. When combining private and public spending on social programs, an American scholar in 2009 categorized the United States as a “middle of the pack” country, spending more than Spain, Finland, or Austria, but less than Britain, France, or Sweden.15 It is commonly argued that massive immigration, legal and illegal, many of whom are poor with scant education, is a major drain on American social expenditures. The rarely mentioned advantage is that most come from the

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west (Europe, South America) and are Christian (Catholic); similar values and religion eases integration and assimilation. Though the EU’s eastward expansion provided a resurgence of European Christianity (Catholics), most new arrivals in today’s Europe are neither from the west nor Christian. The failure to integrate these arrivals has contributed to high unemployment and a radicalization among new immigrants. Racism in Europe is today far worse than in the United States, which has also done a much better job of integrating people from all parts of the globe. European immigration reforms that place greater demands and requirements on new arrivals, while providing less financial assistance, are coupled with a serious and holistic approach to fighting the radicalization of Muslims immigrants and EU citizens. Reforms will lower the social costs over time, however, an attitudinal change among natives is also required, and that takes longer, as the American experience shows. A tendency in a number of countries (Britain, Sweden, France) to increasingly view immigrants as valuable contributors offers hope, as does the fact that most Europeans are convinced that only a pan-European approach to immigration (legal and illegal) will suffice.16 Church attendance may have dropped in Europe, but general religiosity and respect for the church remain strong. Many of the values, norms, and goals espoused by Christians and mainstream Muslims alike still dominate European society, even if the way in which religion manifest itself differs. American Christians adhere strongly to the individualistic classical liberal capitalist model: redemption is for the individual, it is not about reforming society. With religion being a private issue, it is difficult for religious-based morality, ethics, and tolerance to act as the foundation for, and to permeate, society. This privacy argument may sound odd given the public displays of religion in America, but it helps explain the higher prevalence and tolerance of crime and poverty; and the strongest opposition to government programs aimed at diminishing inequality is found among Christian Conservatives. The latter argue private groups should do what Europeans expect from governments. However, the Europeans’ communitarian approach emphasizes the equal worth of all humans as the basis for Christianity, and it is manifest in programs aimed at societal health, security, and equality, but without elevating the individual. Thus, European religious adherence may be less publicly displayed, but its values are clearly identifiable in public programs.

International Issues The strongest popular endorsement of globalization is found in northern and Eastern Europe, in countries such as Sweden, Finland, and the Czech


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Republic. Citizens in the five largest European countries and America are far more reticent toward free trade, foreign investments, and the internationalization of culture and other areas of life; this despite being the greatest recipients and providers of trade and business investments and having invented and driven the system for decades. Yet as we saw, business interests and pragmatism often trump rhetoric aimed at domestic audiences. Americans’ views of Europeans as less willing to fight are correct. Nation building and peacekeeping remain their forte, and Europe will never match our fighting power. But a transatlantic division of labor, even if unspoken, may be mutually beneficial. US Secretary of Defense, Robert Gates, acknowledged in 2009 that economic reality prevents the United States from having the resources to fight every war, that dramatic cuts in new weapons and equipment will ensue over the coming decade, and that multinational production lines and increased joint projects among defense manufacturers is necessary, making cooperation with our allies essential.17 We will now have to rationalize excessive defense expenditures, so Europe’s consolidation and specialization, focusing on peacekeeping and reconstruction, are both welcome and essential. John McCormick, an astute observer of all things transatlantic, argues that America is great at winning battles but not enemy minds; that the “war on terror” oversimplifies complex threats and exaggerates the effectiveness of force, and that American military capabilities actually promote unconventional enemy warfare because it becomes the only way to counter such overwhelming American force. He raises a poignant issue, one of significant relevance to understanding Europe’s advantage in fighting extremism and related threats to security, why, in spite of American investments in military power, do the threats not appreciably recede? Part of the answer may lie in the very association between US foreign policy and military power, and in fears of the threat that the US seems to pose . . . the [EU] . . . invests less in the capacity to destroy than in the capacity to produce . . . It has been able to employ its economic and diplomatic tools . . . political skills and economic pressures. They are building experience in the field of peacekeeping, their troop helped by a credibility advantage over their American counterparts; while European soldiers are associated with peace, American soldiers are associated (rightly or wrongly) with war.18

John Abizaid (former commander of the US Central Command), as well as numerous other generals and politicians, both conservatives and liberals, have testified that success in war, including the fight against terrorism, requires a ratio of nine-to-one nonmilitary to military means, yet US commitments in the twenty-first century just are the opposite. This

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is where Europe’s expertise compliments America’s. In 2004, I attended a discussion turned debate between two four-star generals, one British, one American, both with distinctive and impressive careers. The British general argued that experiences in Northern Ireland, Bosnia, and parts of Africa showed that confidence building through community patrols and involvement was the only way to win the hearts and minds of local populations in conflict zones and sustain long-term peace and development. The American general countered that this was too dangerous, while adding that Americans should not be involved in nation-building. Interestingly, the successful 2008 “surge” strategy advocated and implemented by General Petraeus in Iraq, and subsequent American community involvement, has basically mimicked the British line. In regard to terrorism, it is ironic that while many American officials and commentators have called Europeans weak, several measures in Europe go far beyond the 2001 US Patriot Act in emphasizing security over liberty, often times in ways we would not accept. The difference between the European and American views concern the degree to which governments can ignore normal rules, even if both sides’ views are incrementally converging. Americans see terrorism primarily as an external threat (despite numerous domestic attacks), while for Europeans it has a large internal dimension; America looks to laws of armed conflict, Europe largely to police and domestic laws. One can debate whether the United States is too lax (as revealed in several US Department of Homeland Security tests, e.g., the ease of bringing guns into public places, or lost computers containing security information), or whether the Europeans are too tough, but no one should criticize Europeans for taking security less seriously than the United States. Europe’s press-freedom is stronger than ever, and there are tentative signs that European security laws are reaching the limit of what citizens will tolerate, with outspoken civil groups raising concerns across the continent, although there have been no protests (as of August 2009) of the kind seen in the United States against the Patriot Act. Although twice as many Americans than Europeans say they support some torture on terror suspects, the United States has moved toward the European model, banning the use of torture, erecting commissions to try enemy combatants, and allowing for judicial review. It is clear that both America and Europe have traded more security in exchange for certain constraints on liberties and that a transatlantic convergence is ongoing in the fight against terrorism.19 Neither can succeed without the other, and Jeff Goldsmith of the Hoover Institute adds, “For the sake of transatlantic collective security, our politicians should recognize this fact and succor it. Exaggerating . . . differences for political reasons will only undermine


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the joint fight.”20 Yet the Europeans remain vulnerable to criticism of diffidence. European national traditions, and EU consensus-based decision making, remain obstacles to the optimization of European resources, capabilities, and, ultimately, international influence. The combination of continued American modification of its military emphasis and continued support for European defense and security reforms is therefore essential for continued transatlantic cooperation and improved international security efforts.

Round and Round We Go, But Transatlantic Ties Will Thrive In 2003 leading American neoconservative, Robert Kagan argued “It is time to stop pretending that Europeans and Americans share a common view of the world, or even that they occupy the same world. On the all-important question of power—the efficacy of power, the morality of power, the desirability of power—American and European perspectives are diverging.”21 Today we see increased harmonization of views and policies, from economics to finance, technology, and international conflicts. Leaders on both sides of the pond are moving closer ideologically, and people’s responses in various surveys show similar trends in the general public. At the same time wrongheaded labels and distortions continue, as was evident in the 2009 American debate on health care. Calling something (e.g., universal care) socialist because it exists in a European country, disregarding all the facts of the actual policy, shows the strength of cognitive dissonance (the refusal to accept information contradicting one’s beliefs) and why it is so difficult to convince people to examine reality instead of rhetoric. Look at the trade and investments figures in chapter 4 and cooperation in chapter 7, we would not see such rising interdependence if the transatlantic giants were growing apart. Transatlantic efforts remain critical to political stability and economic growth in both the developed and developing countries, this includes effective responses to real and evolving global security threats such as terrorism, the spread of weapons of mass destruction, environmental degradation, and the myriad humanitarian disasters that accompany pandemics, civil wars, forced migrations, failed states, genocide, ethnic cleansing, and natural disasters. The leadership on both sides of the Atlantic exhibit signs of both realism and idealism, willing to mix hard and soft power, diplomacy and military might (e.g., Iraq was a declared a dire threat and force was used,

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North Korea is a severe threat and seemingly endless diplomacy prevails). It is clear that the centuries old American debate on leadership by example versus intervention, initiated at the birth of the Republic, has donned new clothing as policy makers increasingly express a belief in ideas and diplomacy, while Europe is integrating and developing more hard power. Thus, former German Foreign Minister Joschka Fischer’s argument that “Europe is weak and the US is blind,” implying a Europe limited in its ability to back economic power with military force and an America ignorant of cultural forces and the benefits of diplomatic endeavors, is slowly being replaced with greater EU capabilities, and a diversification of American foreign policy.22 The narrowing of ideological and practical differences is clear in America’s incremental move toward to the European model of a larger role for the state, visible in expanding American social assistance programs and intervention in the economy (e.g., buying debt or regulating finance). At the same time northern and continental European countries have adopted features of Anglo-Saxon capitalism (e.g., freer labor markets, lower business taxes). Furthermore, a 2009 survey revealed that more Americans support higher taxes on the wealthiest citizens than do French, Italian, and British citizens.23 European and American citizens also express very similar threat perceptions (terrorism, global warming, energy, Islamic extremism, Iran’s nuclear program), even if Europe is less concerned about China’s ascendancy; instead, they see more opportunities for exports and development of democracy.24 Importantly, increased convergence also broadens and deepens common international interests. China’s purported challenge is one such area of joint interest. Europe and the United States have fewer people but six times more economic output (see chapter 2), and China’s rampant poverty, authoritarian rule, and disrespect for international trade or copyright laws leaves it a far cry from any international leadership role.25 The transatlantic duo has the same interests in promoting democracy and prying open Chinese markets for European and American goods, because the removal of the obstacles to investments in, and trade with, China, would provide an economic boost to business in both America and Europe. As exports rise, thousands of jobs result on both sides of the Atlantic, while diminishing the trade deficits Europe and the United States have with China. Rare earth metals (used in nontechnology products such as iPods and cell phones) is another area where transatlantic efforts are essential to prevent China from closing access to necessary components that, by sheer happenstance, are located within its borders. Even the staunchest defenders of America’s position in the twenty-first century acknowledge the necessity of closer cooperation with Europe on all of above issues, and other equally important global issues.26


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Let Us Admit That We Are Similar The American tradition of liberty, freedom, and human rights is no longer unique to the United States. Freedom, creativity, ingenuity, and competitive capital are today solidified throughout Europe. Whether you live in Parma, Helsinki, or Gallway, drive a 60-mile a gallon Polo, a new BMW, bike in Tilburg, or take the subway in Stockholm, your life is filled with many of the same joys, aspirations, setbacks, and pains as a Boston clerk, a New York lawyer, or a Seattle teacher. Many of the same financial- and health-related challenges exist on both sides of the Atlantic, and the two richest regions in the world are becoming increasingly integrated, as mentioned, a transatlantic free trade area is now being discussed. As seen in this book, and as you will find through a little research and hopefully some travel, work, or study in Europe: beyond the screaming headlines and controversial sound bites Europeans and Americans are in fact not very different. The EU is soon as competitive as America, America is moving toward European social security, and regulation in banking, commerce, and health care. Many Obama appointees to the US State Department are experts on Europe, a recognition of the region’s importance in the eyes of the US leadership.27 When two giants are as interconnected and interdependent as the United States and Europe you are bound to have disagreements, but these are mostly over how to cooperate rather than imposing one’s will on the other; a true sign of allies. Compared to other countries or regions with which America disagrees, our conflicts with Europe are never very deep or long-lasting, and never threatening militarily. Previous chapters mentioned the disagreements over Iraq, genetically modified foods, and beef. The 2009 unilateral decision by the Obama administration to abandon missile defense installations (promised by the previous Bush administration) in the Czech Republic and Poland, only to later announce their rebirth in Romania (in January 2010), is another example of an unhelpful, and arguably poorly handled, decision. America’s turnaround served only to placate an undemocratic Russia, while increasing resentment of US policy among Polish and Czech citizens. This row will eventually die down, and over time any, but “political perception 101” would dictate having the Polish and Czech leadership announcing the changed policy and replacement, thereby achieving the same end result, while avoiding the perceptions of blunt American unilateralism. Small missteps notwithstanding, the transatlantic relationship embodies a climate of appropriate “competitive cooperation,” where both sides agree to fairly implement domestic competition policies, respect each others’

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interests, and hold regular meetings with officials from multiple government levels.28 To those who may be shaking their head, listing issues where disagreements linger I say: considering the enormity of transatlantic interdependence and its weight internationally, is it not more surprising that there are so few spats? Transatlantic disputes are dwarfed by flows of commerce unscathed by controversy, by political cooperation, economic coordination, intelligence sharing, and common interests around the world. This cooperation and convergence is important in a world of growing challenges and threats, because, as Ambassador Schnabel notes, Not only Europe and America stand to lose from a weakening of the Atlantic Alliance; so does the rest of the world. The US and the EU working together are a tremendous force for good: alleviating poverty, hunger, and disease; defending human rights; and increasing the possibilities for wealth creation through economic freedom. . . . But if our cooperation breaks down, the losses will be incalculable, especially since theses opportunities may not be ours for long. . . . China and India . . . are expanding . . . As Lord Patten put it . . . the US and the EU have two decades to “shape the world” in ways we deem best. After that, in his estimation, economic and demographic trends will force us to share that power with the two emerging Asian giants.29

Europeans and Americans have shared interests. In 2009, roughly 60 percent of Europeans held favorable views of Americans and the number of Americans wanting closer ties to Europe was roughly the same, while suspicion of China’s intentions was rising on both sides of the Atlantic.30 For Americans it takes time adjusting to not being the sole superpower in all areas (economic, social, and military). But Americans should welcome a strong, influential, and competitive Europe that embraces many of the same values Americans hold dear, but which is also not afraid to assert its will and push its agenda in ways inherently conducive to capitalism, democracy, and prosperity. In an ever more interdependent world, the potential for successful American foreign engagements can only increase when citizens’ perspectives are not clouded by myths, misperceptions, and distortions of our closest allies

Suggested Readings and Web sites 1. European Commission, EU Focus, Common Values, Shared Objectives: 2008 Milestones and the Way Forward for EU-US Relations (Washington DC: The


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Delegation of the European Commission to the United States, 2008), http:// www.eurunion.org. 2. European Commission, EU Insight, Year in Review: EU-US Relations (Washington DC: The Delegation of the European Commission to the United States, issue 27, 2008), http://www.eurunion.org. 3. Rockwell A. Schnabel The Next Superpower? The Rise of Europe and Its Challenge to the United States (Maryland: Rowman and Littlefield, 2005). 4. Free book: Alvaro de Vasconcelos, ed., What Ambitions for European Defense in 2020? (Brussels: European Union Institute for Strategic Studies, 2009), http:// www.iss.europa.eu.


Appendix A Figures and Tables

Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Japan Luxembourg Netherlands Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Britain United States EU27 total China Estonia Slovenia

50 45 40 35 30 25 20 15 10 5 0

Figure A.1 Contribution of renewables to energy supply as a percent of energy, 2007 Source: Based on Contribution of renewables to energy supply, under Energy-Energy supply— Renewable energy, OECD (2009), OECD Factbook: Economic, Environmental and Social Statistics, www.sourceoecd.org/factbook.

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Poland

Ireland

Hungary

Greece

Slovak Republic

Belgium

Spain

Switzerland

United States

Austria

Luxembourg

Czech Republic

Italy

Britain

Norway

Sweden

Portugal

Australia

Denmark

Germany

Finland

Netherlands

Japan

France

100 000 95 000 90 000 85 000 80 000 75 000 70 000 65 000 60 000 55 000 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000

Figure A.2 Average advertised download speeds, by country Source: Average advertised download speeds, by country (Sept. 2008), OECD Broadband Portal, table 5a, http://www.oecd.org/sti/ict/broadband.

35 30 25 20 15 10 5

Figure A.3 public)

US

EU

Slovenia

Britain

Poland

Netherlands

Germany

Italy

Finland

France

Sweden

Bulgaria

0

Social spending % of gross domestic product, 2006 (private and

Sources: European Commission, Statistics in Focus 80 (Luxembourg: Eurostat, 2009); OECD Employment Outlook 2007 (Paris: OECD, 2008), p. 161.

Figures and Tables 80

161

Other taxes Labor tax Profit tax

70

60

50

40

30

20

10

Luxembourg Ireland Switzerland Denmark Latvia Bulgaria United Kingdom Slovenia Poland Norway United States Lithuania Greece Slovakia Finland Romania Czech Republic Estonia Germany Austria Sweden Hungary Belgium Spain France Italy China

0

Figure A.4

Total corporate taxes

Source: Doing Business Data Base from the Doing Business Project, International Bank for Reconstruction and Development/The World Bank, 2008.

162

America’s Perceptions of Europe 16 14 12 10 8 6 4 2

United States

EU

Britain

Sweden

Finland

Slovenia

Romania

Poland

Austria

Netherlands

Italy

France

Spain

Germany

Czech Republic

0

Figure A.5 Total public spending on pensions, 2006 Source: Eurostat. European Commission, Eurostat Yearbook 2008 (Luxembourg: Eurostat, 2009).

50 45

Days It Takes to Start a Business Number of Procedures to Start a Business

40 35 30 25 20 15 10 5 Belgium Finland Sweden Bulgaria Denmark Hungary Ireland Estonia France Latvia Slovenia Italy Luxembourg Netherlands Norway Romania Slovakia Britain United States Lithuania Austria Czech Republic Japan Germany Poland Spain China Greece

0

Figure A.6 Starting a business Source: Doing Business Data Base from the Doing Business Project, International Bank for Reconstruction and Development/The World Bank, 2008.

Figures and Tables

163

Figure A.7 Media sources and trends Trend in Regular News Consumption: TV News Sources % of viewership

General Categories: Local News Cable TV News Nightly Network News Network Morning Shows Sunday Morning Shows Cable Networks: CNN Fox News Channel MSNBC CNBC Evening News Programs: NBC Nightly News ABC World News Tonight CBS Evening Tonight News Hour

1998

2000

2002

2004

64

56

38 23

30 20

57 33 32 22

59 38 34 22 12

54 34 28 23 12

52 39 29 22 12

23 17 8 12

21 17 11 13

25 22 15 13

22 25 11 10

22 23 11 11

24 23 15 12

5

20 18 18 5

17 16 16 5

15 14 13 5

14 14 8 5

4

2006 2008

Partisan Profile of TV News Audiences 2008

Percent Who Are . . .

Of Those Who Regularly Watch…

Rep %

Dem %

Ind %

DK %

Fox News Nightly Network News MSNBC CNN News Hour

39 22 18 18 21

33 45 45 51 46

22 26 27 23 23

6=100 7=100 10=100 8=100 10=100

General Public

25

36

29

10=100

2006 Fox News Channel Nightly Network News MSNBC CNN News Hour

38 28 19 22 21

31 40 48 45 47

22 24 26 26 22

9=100 8=100 7=100 7=100 10=100

General Public

28

32

30

10=100

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America’s Perceptions of Europe Cable and Radio Talk Show Audiences: An Ideological Profile Percent Who Are…

Of Those Who regularly watch or listen…

Conservative %

Moderate %

Liberal %

DK %

Rush Limbaugh Hannity & Colmes O’Reilly Factor

80 68 66

7 20 24

10 9 3

3=100 3=100 7=100

Lou Dobbs Hardball Larry King Live

38 35 33

34 25 31

18 26 30

10=100 14=100 6=100

The Daily Show Colbert Report

22 14

24 45

45 35

9=100 5=100

General Public

35

35

20

10=100

Talk Radio Listeners: Conservatives, Middle-Aged Males Listen to Talk Radio Regularly % Total

17

Party/Ideology: Conservative Reps Moderate/Liberal Reps Conservative/ Moderate Dems Liberal Dems

28 13 15 20

Sex/Age: Men < 30 Women < 30 Men 30–49 Women 30–49 Men 50+ Women 50+ Type of News Followed “Very Closely” Weather Crime Education Community

17 19 26 13 16 13 2002 %

2004 %

2006 %

2008 % 48 28 23 22

30

53 32

50 29

31

28

26

Continued

Figures and Tables Type of News Followed “Very Closely”

2002 %

2004 %

165 2006 %

2008 %

Environment Politics/Washington News

21

24

17

21 21

Local Government Health News Sports Religion

22 26 25 19

22 26 25 20

20 24 23 16

20 20 20 17

International Affairs Business and Finance Consumer News Science and Technology

21 15 12 17

24 14 13 16

17 14 12 15

16 16 13 13

Entertainment Culture and Arts Celebrity News Travel

14 9

15 10

12 9

10 11 7 6

Source: Pew Research Center for the People and the Press, a Project of the Pew Research Center, 2007, pp. 14–16, 22, 39, http://people-press.org/reports/pdf/444.pdf.


Appendix B Survey of American Students’ Views and Ideas of Europe

Additional Commentary on the Survey Results Though this survey was small and unscientific, and with the exception of views on education and EU military power, the results largely confirm existing public opinion research.1 Among those who believe Europe is socialist, only 9 percent also believe Europeans are pacifist, but 15 percent are convinced that universal healthcare means one cannot see a doctor of one’s choosing. Surprisingly 46 percent of the respondents who think Europe is predominantly socialist (question 10) also believe Europeans have the same living standards as the Americans. Whatever the reason, this limited survey correlates well with the Pew public knowledge study cited in chapter 2, showing that the general public’s knowledge of politics has not improved since 1987. Among some other interesting findings in my survey, we find that 38 percent of those who believe Europeans are pacifist are also convinced they refuse to use military power (questions 33 and 52). In the 18 percent of respondents who believe Europeans are poorer than Americans, 44 percent also believe European living standards are lower. At least that is consistent.

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Figure B.1 Survey Results of American Students’ Views and Ideas of Europe (All figures are percent of respondents) DK = Do not know 1. Generally, I am informed about international affairs (political and economic). 19 68 11 2 No somewhat completely true DK 2. I know what the European Union is. 39 33 18 No somewhat moderately

10 very well

3. My gender is . . . 54 46 female male 4. What is your age range? 66 32 Under 20 20–30

2 30–40

0 Over 40

5. I have taken a course in international relations or US Government. 56 44 Yes No 6. I have lived in the United States for the past 10 years. 95 5 Yes No 7. I read a daily newspaper or national Internet news. 40 60 Yes No 8. Which of the following statements do you agree with? (You may choose more than one) 1 Germans are pacifists 16 French are pacifists 14 Europe is socialist 7 Europeans are poorer than Americans 63 None apply

Views and Ideas of Europe

169

9. Do you believe Europeans in general are less willing than Americans to work hard? 7 72 21 Yes No DK 10. Do you believe European countries in general are socialist? 23 36 41 Yes No DK 11. Do you believe European countries in general are less competitive in business than the United States? 26 59 15 Yes No DK 12. Do you believe universal healthcare means you cannot choose your doctor? 16 67 17 Yes No DK 13. Which of the following countries do you believe have most in common with the United States? (You may choose more than one) 60 UK 27 France 33 Germany The rest of the countries were 30 percent or below 14. Which of the following countries do you believe have nothing in common with the United States? (You may choose more than one) Sweden and Finland received 20 percent each, the rest 15 percent or less 15. Europeans are less willing to work hard than Americans. 6 30 50 14 Agree Same as US Disagree DK 16. The French are pacifists. 23 23 Agree Disagree

54 DK

17. Europeans are weak on terrorists. 14 47 Agree Disagree

39 DK

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18. Europe is homogenous, lacking ethnic and racial diversity. 13 13 58 16 Agree Same as US Disagree DK 19. European countries in general are less competitive in business than the United States 20 13 44 23 Agree Same as US Disagree DK 20. Europe is overrun with immigrants. 7 16 52 Agree Same as US Disagree

27 DK

21. European countries have little entrepreneurship and few private enterprises. 7 11 41 41 Agree Same as US Disagree DK 22. European economies are over regulated and uncompetitive. 7 5 41 44 Agree Same as US Disagree DK 23. Europeans are generally overtaxed and earn less than Americans. 19 33 43 5 Agree Same as US Disagree DK 24. Europeans’ incomes and living standards are lower than Americans’. 21 13 44 22 Agree Same as US Disagree DK 25. Western Europe is sclerotic, eastern Europe is vibrant and dynamic. 9 23 68 Agree Disagree DK 26. Europeans are secular. 12 12 Agree Same as US

16 Disagree

60 DK

27. Europeans are tree hugging and carbon-obsessed. 6 10 46 38 Agree Same as US Disagree DK


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28. Europe suffers from technological deficiencies and backwardness, lack of innovation and development. 7 5 61 27 Agree Same as US Disagree DK 29. Europeans have worse Internet and cell phone capabilities. 12 13 46 29 Agree Same as US Disagree DK 30. Europeans have exaggerated global warming, reacting with socialist policies dictating individual behavior. 10 13 37 41 Agree Same as US Disagree DK 31. Europeans live in a dream world where talk and economic engagement can solve the world’s problems. 12 9 46 33 Agree Same as US Disagree DK 32. Europe lacks military power. 13 5 Agree Same as US

58 Disagree

24 DK

33. Europeans are pacifists, refusing to use military force. 8 7 52 33 Agree Same as US Disagree DK 34. Europeans are unwilling to deal aggressively with terrorists. 17 6 42 35 Agree Same as US Disagree DK 35. European help is not needed for America when trying to combat threats to security or reform international organizations. 8 62 30 Agree Disagree DK 36. Do you believe that Europeans are less willing to work hard than Americans? 6 74 20 Yes No DK

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37. Do you believe Europe is more influential internationally than China? 22 52 26 Yes No DK 38. Do you believe Europe is homogenous, lacking ethnic and racial diversity? 9 9 55 27 Yes Same as US No DK 39. Do you believe European countries in general are less competitive in business than the United States? 15 12 56 17 Yes Same as US No DK 40. Do you believe Europe is overrun with immigrants? 3 13 58 26 Yes Same as US No DK 41. Do you believe European countries have little entrepreneurship and few private enterprises? 9 7 47 37 Yes Same as US No DK 42. Do you believe European economies are over taxed and uncompetitive? 12 13 38 37 Yes Same as US No DK 43. Do you believe primary education and high schools are better in Europe than in America? 32 12 31 25 Yes Same as US No DK 44. Do you believe Europeans’ incomes and living standards are lower than Americans’? 16 10 52 22 Yes Same as US No DK 45. Do you believe west Europeans are lazy and overpaid, but that east Europeans work harder? 6 43 51 Yes No DK

Views and Ideas of Europe 46. Do you believe Europeans are too secular? 2 7 31 Yes Same as US No

173

60 DK

47. Do you believe Europeans are too environmentally conscious? 4 Yes

9 Same as US

52 No

35 DK

48. Do you believe Europe suffers from technological deficiencies and backwardness, lack of innovation and development? 9 Yes

6 Same as US

57 No

28 DK

49. Do you believe Europeans have worse Internet and cell phone capabilities? 13 Yes

7 Same as US

50 No

30 DK

50. Do you believe Europeans have gone too far in caring about climate change, including dictating individual behavior? 7 Yes

7 Same as US

48 No

39 DK

76 No

14 DK

51. Do you believe Europeans are lazy? 4 Yes

7 Same as US

52. Do you believe Europe lacks military power? 14 Yes

2 Same as US

62 No

22 DK

53. Do you believe Europeans refuse to use military force? 12 Yes

4 Same as US

53 No

31 DK

54. Do you believe Europeans are unwilling to deal with terrorists? 11 Yes

5 Same as US

58 No

26 DK

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55. Do you believe European help is unnecessary for America when trying to combat threats to security or reform international organizations? 15 54 31 Yes No DK This survey belongs is part of copyrighted material, reproduction is strictly prohibited without prior permission. Figure B.2 Survey Template of American Students’ Views and Ideas of Europe DK = Do not know 1. Generally, I am informed about international affairs (political and economic). No somewhat completely true DK 2. I know what the European Union is. No somewhat moderately 3. My gender is . . . female

very well

male

4. What is your age range? Under 20 20–30

30–40

Over 40

5. I have taken a course in international relations or US Government. Yes No 6. I have lived in the United States for the past 10 years. Yes No 7. I read a daily newspaper or national Internet news. Yes No


175

8. Which of the following statements do you agree with? (You may choose more than one) Germans are pacifists French are pacifists Europe is socialist Europeans are poorer than Americans None apply 9. Do you believe Europeans in general are less willing than Americans to work hard? Yes No DK 10. Do you believe European countries in general are socialist? Yes No DK 11. Do you believe European countries in general are less competitive in business than the United States? Yes No DK 12. Do you believe universal healthcare means you cannot choose your doctor? Yes No DK 13. Which of the following countries do you believe have most in common with the United States? (You may choose more than one) UK France Italy Germany Spain Poland Sweden Finland DK

176


14. Which of the following countries do you believe have nothing in common with the United States? (You may choose more than one) UK France Italy Germany Spain Poland Sweden Finland DK 15. Europeans are less willing to work hard than Americans. Agree Same as US Disagree DK 16. The French are pacifists. Agree Disagree

DK

17. Europeans are weak on terrorists. Agree Disagree

DK

18. Europe is homogenous, lacking ethnic and racial diversity. Agree Same as US Disagree DK 19. European countries in general are less competitive in business than the United States Agree Same as US Disagree DK 20. Europe is overrun with immigrants. Agree Same as US Disagree

DK

21. European countries have little entrepreneurship and few private enterprises. Agree Same as US Disagree DK


177

22. European economies are over regulated and uncompetitive. Agree Same as US Disagree DK 23. Europeans are generally overtaxed and earn less than Americans. Agree Same as US Disagree DK 24. Europeans’ incomes and living standards are lower than Americans’. Agree Same as US Disagree DK 25. Western Europe is sclerotic, eastern Europe is vibrant and dynamic. Agree Disagree DK 26. Europeans are secular. Agree Same as US

Disagree

DK

27. Europeans are tree hugging and carbon-obsessed. Agree Same as US Disagree DK 28. Europe suffers from technological deficiencies and backwardness, lack of innovation and development. Agree Same as US Disagree DK 29. Europeans have worse Internet and cell phone capabilities. Agree Same as US Disagree DK 30. Europeans have exaggerated global warming, reacting with socialist policies dictating individual behavior. Agree Same as US Disagree DK 31. Europeans live in a dream world where talk and economic engagement can solve the world’s problems. Agree Same as US Disagree DK

178


32. Europe lacks military power. Agree Same as US

Disagree

DK

33. Europeans are pacifists, refusing to use military force. Agree Same as US Disagree DK 34. Europeans are unwilling to deal aggressively with terrorists. Agree Same as US Disagree DK 35. European help is not needed for America when trying to combat threats to security or reform international organizations. Agree Disagree DK 36. Do you believe that Europeans are less willing to work hard than Americans? Yes No DK 37. Do you believe Europe is more influential internationally than China? Yes No DK 38. Do you believe Europe is homogenous, lacking ethnic and racial diversity? Yes Same as US No DK 39. Do you believe European countries in general are less competitive in business than the US? Yes Same as US No DK 40. Do you believe Europe is overrun with immigrants? Yes Same as US No DK


179

41. Do you believe European countries have little entrepreneurship and few private enterprises? Yes Same as US No DK 42. Do you believe European economies are over taxed and uncompetitive? Yes Same as US No DK 43. Do you believe primary education and high schools are better in Europe than in America? Yes Same as US No DK 44. Do you believe Europeans’ incomes and living standards are lower than Americans’? Yes Same as US No DK 45. Do you believe west Europeans are lazy and overpaid, but that east Europeans work harder? Yes No DK 46. Do you believe Europeans are too secular? Yes Same as US No

DK

47. Do you believe Europeans are too environmentally conscious? Yes Same as US No DK 48. Do you believe Europe suffers from technological deficiencies and backwardness, lack of innovation and development? Yes Same as US No DK 49. Do you believe Europeans have worse Internet and cell phone capabilities? Yes Same as US No DK

180


50. Do you believe Europeans have gone too far in caring about climate change, including dictating individual behavior? Yes Same as US No DK 51. Do you believe Europeans are lazy? Yes Same as US No

DK

52. Do you believe Europe lacks military power? Yes Same as US No

DK

53. Do you believe Europeans refuse to use military force? Yes Same as US No DK 54. Do you believe Europeans are unwilling to deal with terrorists? Yes Same as US No DK 55. Do you believe European help is unnecessary for America when trying to combat threats to security or reform international organizations? Yes No DK This survey belongs is part of copyrighted material, reproduction is strictly prohibited without prior permission.

Notes

1 The Global Engine That Keeps on Going, and Going, and Going 1. Rush Limbaugh, “Europe-Loving Justice Kennedy: Hero of Terrorists, Child Rapists,” The Rush Limbaugh Show, transcript posted, June 25, 2008, http:// www.rushlimbaugh.com/home/daily/site_062508/content/01125106.guest. html.; Glenn Beck, “The Glenn Beck Show” Fox News, March 19, 2009. 2. The survey was conducted in college freshman courses at four institutions in California, New York, and Pennsylvania between August 31- and September 3, 2009. The response sample size was 259, and it was not a random sample, the combination of which means no confidence level was calculated. This project was approved by the East Stroudsburg University of Pennsylvania Institutional Review Board for the Protection of Human Subjects.

2 Misperceptions, Myths, and Justifications Explained 1. According to a 2007 Pew Global Attitudes study all west European citizens, Canadians, and most east Europeans and Asians follow international news more closely than do Americans. The Pew Research Center for the People and the Press, a project of the Pew Research Center, What Americans Know: 1989–2007 Public Knowledge of Current Affairs Little Changed by News and Information Revolutions, April 15, 2007, http://people-press.org/report/319/ public-knowledge-of-current-affairs-little-changed-by-news-and-informationrevolutions. Furthermore, “In 1994, for example, an eight-nation survey found that citizens of Mexico, Spain, Italy, Canada, Germany, Britain and France were more able than Americans to provide correct answers to a series of questions tapping foreign affairs. Whereas 37 percent of the American sample

182

2.

3.

4. 5. 6.

7. 8. 9.

10. 11. 12.

13.

14.

Notes was unable to answer a single question, the comparable level of ignorance (averaged) for Italy, France, Britain, Germany and Canada was 19 percent.” Shanto Iyengar and Richard Morin, “Mind the Gap Differences in Public Knowledge about Domestic and Overseas Events,” Washington Post, July 5, 2006, http://www.washingtonpost.com/wp-dyn/content/article/2006/07/05/ AR2006070501144.html. Cyril Buffet and Beatrice Heuser, Haunted by History Myths in International Relations (Oxford, New York: Berghahn Books, 1998). See also Robert Jervis, Perception and Misperception in International Politics (Princeton, NJ: Princeton University Press, 1967). The Pew Research Center for the People and the Press, a project of the Pew Research Center, Key News Audiences Now Blend Online and Traditional Sources, August 17, 2008, p. 15, http://people-press.org/reports/ pdf/444.pdf. Brian Moller-Jensen, Myter, Myte or realitet (Herning: Systime, 1988), pp. 6–8. Haunted by History, p. viii, footnotes 9–11. Hans J. Morgenthau, “We Are Deluding Ourselves in Vietnam,” New York Times Magazine, April 18, 1965 (restricted access), http://select.nytimes.com/ gst/abstract.html?res=F40F11F73E5812738DDDA10994DC405B858AF1D 3&scp=1&sq=The%20Government%20fashions%20an%20imaginary%20 world%20that%20pleases%20it,%20and%20then%20comes%20to%20believe%20in%20the%20reality%20of%20%20that%20world%20and%20 acts%20as%20though%20it%20were%20real%20&st=cse. Haunted by History, p. 7. Mart Lewis and Kari Wigen, The Myth of Continents: A Critique of Methageography. (Berkeley: University of California Press, 1997) Ghia Nodia, “Nationalism and Democracy,” (Lecture, Kennan Institute for Advanced Russian Studies, Woodrow Wilson Center, Washington DC, October 14, 1991). “Key News Audiences Now Blend Online.” M. M. Nelson, “Transatlantic Travails,” Foreign Policy 92 (1993), p. 78. Daniel S Hamilton and Joseph P. Quinlan, Partners in Prosperity. The Changing Geography of the Transatlantic Economy (Washington, DC: Center for Transatlantic Relations, Johns Hopkins University, 2004); Transatlantic Business Dialogue, Employment Facts, http://www.tabd.com/index. php?option=com_content&task=view&id=21&Itemid=50. European Commission, EU Focus, Shared Values and Objectives (The Delegation of the European Commission to the United States, 2008), http. www://eurunion.org. Francis Fukuyama and Michael McFaul, Should Democracy be Promoted or Demoted? (Muscatine, IO: The Stanley Foundation, June 2007), pp. 1–16, http://www.reports.stanleyfoundation.org; Fredrik Erixon, “Globalization, Earnings and Consumer Prices: Taking Stock of the Benefits from Global Economic Integration,” Policy Briefs No. 5 (Brussels: European Center for International Political Economy, 2008), p. 9.

Notes

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15. Gary Gereffi, Vivek Wadhwa, Ben Rissing, and Ryan Ong, “Getting the Numbers Right: International Engineering Education in the United States, China, and India,” Journal of Engineering Education, January 13, 2008, p. 19, http://www.cggc.duke.edu/pdfs/Gereffi_JEE_GettingthenumbersrightUSChina&India_Jan2008.pdf. On page 20, they state: “A 2005 McKinsey Global Institute survey of corporate human resource managers supports this idea, concluding that 80.7 percent of US engineers were globally employable, while only 10 percent of Chinese engineers and 25 percent of Indian engineers were similarly employable.” 16. E.g., Mixim Pei, “Bamboozle! Don’t Believe the Asia Hype” Foreign Policy July/August (2009), pp. 32–36; Jamil Anderlini “A Cautionary Tale from China,” Financial Times, July 28, 2009, p. 8. 17. Ben Simpfendorfer, quoted in Geoff Dyer, “Economists Treat Statistics from Beijing with Caution,” Financial Times, January 23, 2009, p. 4. 18. Andrew Willis, “EU Takes China to WTO over Raw Materials” EUObserver, June 23, 2009, http://euobserver.com/9/28360/?rk=1. 19. E.g., “Shared Destiny”: How Relevant Is Europe to the United States under Obama?”: BBC World Debate Press Conference transcripts, Brussels Forum, March 20, 2009, http://www.gmfus.org/brusselsforum/2009/transcripts. html. 20. Stimulus programs are estimated at approximately 6–8 percent of GDP in the United States for 2009–2010. EU governments will provide roughly 5 percent of GDP, or around €600 bn ($840bn), to stimulate the economy and support citizens over 2009–2010, including automatic support measures such as unemployment compensation, housing assistance, or food programs. 21. The IMF estimated in April 2009 that US and European banks accounted for 90 percent ($4 trillion) of required “write-downs” resulting from assets with less current value than at the time of acquisition; the American share being $2.7 trillion. International Monetary Fund, World Economic Outlook Crisis and Recovery, April (2009), http://www.imf.org/external/pubs/ft/ weo/2009/01/. 22. Karl-Theodor zu Guttenberg in Bertrand Benoit, “ ’Bavarian baron’ Stays Resolute on Economic Orthodoxy,” Financial Times, June 8, 2009, p. 3. 23. Cf. e.g., Kati Suominen, “A New Age of Protectionism? The Economic Crisis and Transatlantic Trade Policy” Brussels Forum Paper Series March (Brussels: The German Marshall Fund of the United States, 2009), http://www.gmfus. org/brusselsforum/2009/docs/BF_Kati_Suominen_Final.pdf. 24. Ronald Kessler, “GOP House Members Form Caucus To Fight Media Bias” Newsmax.com, June 3, 2009, http://www.newsmax.com/kessler/media_bias_ House_caucus/2009/06/03/221014.html. 25. Michael Bloomsberg, “America Must Resist Protectionism,” Financial Times, December 12, 2007, p. 7; Leif Johan Eliasson, “Protectionism: The greatest threat to our well-being” Pocono Record, August 2, 2008, p. 7; Jagdish Bhagwati, “Obama and trade: An alarm sounds,” Financial Times, January 9, 2008, p. 7.

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26. See e.g., Transatlantic Business Dialogue, Driving Forward Transatlantic Economic Integration TABD Recommendations to the 2008 US-EU Summit Leaders, May 13 (2008), http://www.tabd.com/storage/tabd/documents/ 2008_report_to_summit_leaders.pdf 27. Karsten Voigt, interviewed by Harry Kreisler, UC Berkeley Conversations with History: Karsten Voigt, UC Berkeley, February 16, 2001, UCTV video, posted February 7, 2008, http://www.youtube.com/watch?v=ZavGr_fqnd8. 28. British Council, Transatlantic Network 2020, Talking Transatlantic (2008), p. 12, http://www.britishcouncil.org/tn2020-booklet_final.pdf. 29. Pierangelo Isernia, Zoltan Juhasz, and Hans Rattinger, “Foreign Policy and the Rational Public in Comparative Perspective,” Journal of Conflict Resolution 46, no. 2 (2002), p. 201; Mark A. Peffley and Jon Huwitz, “Traditional versus Social Values as Antecedents of Racial Stereotyping and Policy Conservatism,” Political Behavior 14, no. 4 (1992), pp. 395–421. 30. “Mind the Gap Differences.”

3 Simplifying the Confusing: The “Short-Short” of Europe and the European Union 1. Franklin D. Roosevelt, “The Four Freedoms” Address to Congress, January 6, 1941, Congressional Record, Vol. 87, Pt. I, http://www.wwnorton.com/college/ history/ralph/workbook/ralprs36b.htm. 2. Tony Blair, “Speech to the European Parliament,” June 23, 2005, Prime Minister’s Speeches, http://www.number10.gov.uk/Page7714. 3. See the text of the Consolidated Treaty for the language on social, cultural, economic, and other policy issues and goals. “Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union,” European Union, Official Journal C 115, May 9, 2008, http://eur-lex.europa.eu/en/treaties/index. Although security considerations are ever-present, it is crucial to note that the integration process has always largely been political and elite-led, with France desiring a Europe in its image and up through the 1990s rarely hesitating to remind Germany of its past. Though the French-German partnership cannot steer integration like it could when there were six or even twelve members, no major decision is taken in outright opposition from either. The same applies to other big members such as Britain, Spain, and Italy. 4. Certain policies are formally enshrined in the treaty, such as the common agricultural policy (Articles 38 through 47), common trade policy (Articles 110 through 116), and transport policy (Articles 74 through 84). Others may be launched depending on needs, as specified in Article 235, which stipulates that “If action by the Community should prove necessary to attain, in

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the course of the operation of the common market, one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the Assembly, take the appropriate measures.” Since 1972 this article has enabled the community to develop actions in the field of environmental, regional, social, and industrial policy. See “Consolidated Versions of the Treaty on European Union.” 5. There are a few minor exceptions that limit movement of workers from eastern European states into Germany and Italy until 2011. Even so, the German and Italian authorities provide a large number of easily attainable, interim work visas. 6. The US equivalent is roughly 1 million. Stated differently, in 2007 the EU had 5 percent of its workforce in agriculture; the United States had 0.6 percent. See European Commission, General and Regional Statistics, Total Farm Labor Force, Eurostat, 2009, http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=tab le&init=1&language=en&pcode=tag00020&plugin=0.; Central Intelligence Agency, World Fact Book, Country Tables, https://www.cia.gov/library/publications/the-world-factbook/geos/us.html. 7. European Commission, Eurobarometer 66, Summer 2006, p. 10, http:// ec.europa.eu/public_opinion/index_en.htm.

4 Attractive, Determined, and Competitive: Socialism Has Ceased to Be 1. Clive Crook, “Economically Speaking, America Could Soon Be More European than Europe,” Dispatch, March 5, 2008, http://www.theatlantic. com/doc/200803u/no-american-exceptionalism; Ann Coulter, Interview by Neil Cavuto, Your World Cavuto, FOX, December 28, 2008; Mark Levin, Mark Levin Show, June 8, 2007, http://www.marklevinshow.com/home.asp; Charles Murray, In Our Hands a Plan to Replace the Welfare State (Washington DC: AEI Press, 2006) quoted in Mark Steyn, “Live Free or Die!,” Imprimis 38, no. 4 (2009), p. 6. 2. Interviewed by Fareed Zakaria, GPS, CNN, August 3, 2009. 3. Christian Democratic parties tend to be conservative on social, cultural, and moral issues and more progressive on fiscal policies, and thus in the European tradition they are considered moderately conservative. 4. European Union, Lisbon Strategy, Glossary, http://europa.eu/scadplus/ glossary/ lisbon_strategy_en.htm; Eurofound, “Flexicurity,” http://www. eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/ FLEXICURITY.htm. 5. Denis Boyles, “Like, Wow The Post-Election Cure for Anti-Americanism,” Europress Review, October 29, 2004, http://www.nationalreview.com/europress/ boyles200410291315.asp; Thomas Sowell, “So Wrong, So Often, for

186

6.

7.

8.

9.

10.

11.

12.

13.

Notes So Long, Yet It’s Europe We Want to Copy,” Investor’s Business Daily, June 24, 2008, http://www.ibdeditorials.com/IBDArticles .aspx?id=299193338386927; “Live Free or Die!,” p. 6. Productivity grew by 50 percent in the eastern European countries. For the economically weakest and strongest regions, see European Union, “Regional GDP per inhabitant in the EU27 GDP per inhabitant in 2006 ranged from 25% of the EU27 average in Nord-Est in Romania to 336% in Inner London,” news release, February 19, 2009, http://europa.eu/rapid/pressReleasesAction. do?reference=STAT/09/23&format=HTML&aged=0&language=EN&guiL anguage=en. European Commission, “Euroindicators 87/2009,” Eurostat news release, June 16, 2009, http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3– 16062009-AP/EN/3–16062009-AP-EN.PDF. In national competitiveness, European countries took 6 of the top 10 spots in 2008–2009, after the United States. Michael E. Porter and Klaus Schwab, The Global Competitiveness Report 2008–2009 (Geneva: World Economic Forum, October 8, 2008), http://www2.weforum.org/en/initiatives/gcp/Global%20 Competitiveness%20Report/index.htm. Bruno Lanvin, E-Skills, Competitiveness and Employability Knowledge Societies’ Next Frontier (Paris: Insead, White Paper, September 2008), http://www. insead.edu/ facultyresearch/centres/elab/research/eskills.cfm. US Bureau of Economic Analysis, International Economic Accounts, “Foreign Direct Investment in the US: Financial and Operating Data for US Affiliates of Foreign Multinational Companies,” http://www.bea.gov/ international/di1fdiop.htm.; Daniel Hamilton and Joseph Quinlan, The Transatlantic Economy 2006 (Washington DC: Center for Transatlantic Relations, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University, 2006). Although the number of jobs created in the United States has declined slightly since 2001 (down 7 percent), there have been significant increases in trade and investments. Transatlantic Business Dialogue, Key Trade and Investment Facts Bird’s Eye View (2009), http://www.tabd.com/index.php?option=com_content &task=view&id=17&Itemid=46. All figures from European Commission, Foreign Direct Investment Yearbook (Luxembourg: Eurostat, 2008), http://epp.eurostat.ec.europa.eu/cache/ITY_ OFFPUB/KS-BK-08–001/EN/KS-BK-08–001-EN.PDF. “Foreign direct investment is the category of international investment in which an enterprise resident in one country (the direct investor) acquires an interest of at least 10 percent in an enterprise resident in another country (the direct investment enterprise). Subsequent transactions between affiliated enterprises are also direct investment transactions. As it gives the investor an effective voice in the management of the enterprise and a substantial interest in its business, FDI implies a long-term relationship between the direct investor and the direct investment enterprise.” Ibid., p. 20. Romania, the EU’s poorest member, is attracting major international software investors, including American, to produce products for the European

Notes

14.

15. 16. 17.

18.

19.

20. 21. 22.

23.

187

and global market relatively cheaper than elsewhere in Europe. Names include Oracle, HP, IBM, Alcatel, and Siemens. Daniel Hamilton and Joseph Quinlan, The Transatlantic Economy 2008 Annual Survey of Jobs, Trade, and Investment between the United States and Europe (Washington DC: Center for Transatlantic Relations, Brookings Institute, 2008). Traditionally FDI was a way around trade barriers, but today FDI and trade liberalization move in step, so enforcement of competition rules is essential. Steve McGuire and Michael Smith, The European Union and the United States Competition and Convergence in the Global Arena (New York: Palgrave Macmillan, 2008), p. 120. Again, this is something both Europe and the United States emphasize in relations with India and China. Moises Naim, “The Coming Euroinvasion,” Foreign Policy, May/June, no. 166 (2008), pp. 95–96. European Commission, Mergers Statistics, 1990–2009, http://ec.europa.eu/ competition/mergers/statistics.df. Europe has 175, United States 155, own calculations from “Global 500 Our Annual Ranking of the World’s Largest Corporations” CNNMoney.com, 2008, http://money.cnn.com/magazines/fortune/global500/2008. Andrew England and Peggy Holliner, “Saudis Award 9,000km Border Security Contract,” Financial Times, July 2, 2009, p. 5; James Boxell, “Set Standards First, Then Tackle Crisis,” Financial Times, September 8, 2009, Special Section Defense, p. 3. Martin Sieff, “Europe Can Offer Defense Deals Washington Can’t Refuse” European Affairs 9, no. 3 (2008), http://www.europeanaffairs.org/current_ issue/ 2008_fall/ 2008_fall.php4. Lucia Kubosova, “Europe Unveils Its Vision For Global Financial Reform,” EUObserver.com, November 7, 2008, http://euobserver.com/9/27074/?rk=1. The constitutional amendment requires balancing over an economic cycle 2–3 years, leaving politicians some flexibility. Craig Whitlock, “E.U. President Blasts US Spending: Czech Premier Calls Obama Administration’s Economic Policies ‘a Road to Hell,’ ” Washington Post, March 25, 2009, http://www.washingtonpost.com/wp-dyn/content/ article/2009/03/25/AR2009032502074.html; Robert Anderson, “Sweden Sees Role as EU Model,” Financial Times, June 17, 2009, p. 4; Karl-Theodor zu Guttenberg quoted in Bertrand Benoit, “ ‘Bavarian baron’ Stays Resolute on Economic Orthodoxy,” Financial Times, June 8, 2009, p. 3. Guttenberg also noted that European automatic stabilizers, which the United States to a large extent lacks, also lessened the necessity of massive extra stimuli. European Union, Lisbon European Council Presidency Conclusions (March 23–24, 2000), http://www.europarl.europa.eu/summits/lis1_en.htm; Alexander Lamfalussy, Cornelius Herkstroter, Luis Angel Rojo, Bengt Ryden, Luigi Spaventa, Norbert Walter, and Nigel Wicks, Final Report of the Committee of the Wise Men on the Regulation of European Securities Market” (Brussels: European Commission, 2001), http://ec.europa.eu/internal_ market/securities/docs/lamfalussy/wisemen/final-report-wise-men_en.pdf. One large and persistent problem is that bank regulations remain national.

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24. European Regional Development Fund co-finances investments concentrated in the poorest regions. Concerning convergence, it focuses on economic modernization and diversification, as well as sustainable jobs, innovation in the knowledge-based economy, and the environment. The Cohesion Fund mainly co-finances transport networks and environment projects in states whose gross national income per inhabitant is less than 90 percent of the EU average. See e.g., European Union, “Europe in Twelve Lessons,” Lesson 5 what does the EU do?, http://europa.eu/abc/12lessons/index_en.htm. 25. Bruno Lanvin and Nils Fonstad, Who Care? Who Dares? Providing the Skills for an Innovative and Sustainable Europe (Paris: Insead, Background Report prepared for the European Business Summit, March 27, 2009), http://www.insead.edu/facultyresearch/centres/elab/rightnav/documents/ EBSeskillsfinal.pdf. 26. E.g., a 10 percent increase in corporate tax rates reduces the investment-toGDP ratio by 2 percentage points. Djankov Siemon, Time Ganser, Caralee McLiesh, Rita Ramalho, Andrei Schleifer, “The Effect of Corporate Taxes on Investment and Entrepreneurship,” Working Paper 13756 (Cambridge, MA: National Bureau of Economic Research, 2009). 27. International Bank for Reconstruction and Development/The World Bank., Paying Taxes 2009 The Global Picture, 2009, pp. 18–19, http://www.doingbusiness.org/ExploreTopics/PayingTaxes. 28. Ibid; US Government Accountability Office, US Multinational Corporations Effective Tax Rates Are Correlated with Where Income Is Reported,” GAO-08950. Report to the US Senate Committee on Finance, 110th Cong., August 2008, pp. 2, 16. http://www.gao.gov/new.items/d08950.pdf. 29. Martin Wolf, “Big Spending Does Not Mean Less Growth,” Financial Times, March 23, 2005, p. 9. Wolf also notes that American GDP per person growth is due to higher population growth than in Europe, and says “Measurement of GDP and so of productivity is increasingly hard to do as output becomes less material”; Barry Jaruzelski and Kevin Dehoff, The Customer Connection: Global Innovation 1000 (Booz Allen Hamilton, October 12, 2007), http:// www.ipeg.com/_UPLOAD%20BLOG/The%20Global%20Innovation%20 1000%202007%20Booz%20Hamilton.pdf; Economic Opportunity & Prosperity the 2009 Index of Economic Freedom (The Heritage Foundation and the Wall Street Journal, 2009), http://www.heritage.org/index/Default.aspx. 30. Economic Opportunity & Prosperity, Denmark country summary, http://www. heritage.org/index/Country/Denmark#business-freedom. 31. Based on Enterprises with less than 20 persons engaged, under Macroeconomic trends—Economic structure—Small and medium-sized enterprises, OECD (2009), OECD Factbook 2009: Economic, Environmental, and Social Statistics, www.sourceoecd.org/factbook 32. Frank J. Brown and Jean-Phillipe Courtois, “How to Drive Innovation in Europe Funding, Yes, But Mostly Less Red Tap” Wall Street Journal Europe, February 12, 2009, http://online.wsj.com/article/SB123440185965175441. html. 33. EU Economic Data pocket book 4-2008, pp. 25–33.

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34. Eric Bartelsman, Stefano Scarpetta, and Fabiano Schivardi, “Comparative Analysis of Firm Demographics and Survival: Micro Level Evidence from the OECD Countries,” Industrial and Corporate Change 14 (2005), pp. 365–391. 35. Xavier Sala-i-Martin, Economist at Columbia University quoted in “Nurturing the Youngsters,” Economist, July 18, 2009, p. 62. 36. “European Bankruptcy Laws Out of Pocket,” Economist, January 3, 2009, p. 46. 37. “How to Drive Innovation.” 38. Higher Education and Region (OECD September 2007), http://www.oecd. org/dataoecd/60/51/39311062.pdf. 39. “Several clusters with high R&D intensity can be identified, often in regions that have universities and research institutes (such as Braunschweig or Tübingen [both Germany]), or areas where transport equipment manufacturing is particularly important (such as the Midi-Pyrénées (France) or Stuttgart [Germany]). The ten most research-intensive regions included four German and four Swedish regions.” European Commission, Regions of the European Union a Statistical Portrait (Luxembourg: Eurostat, 2009), p. 26, http://epp. eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-EP-08-001/EN/KS-EP-08001-EN.PDF. 40. Peggy Hollinger, “Dirigisme de rigueur,” Financial Times, June 4, 2009, p. 7. 41. “Live Free or Die!”; “So Wrong, So Often”; David Brooks, “Fear and Rejection,” New York Times, June 2, 2005, p. A12. 42. US Bureau of Labor Statistics, “Alternative Measures of Labor Utilization,” September 2009, Table 21-A, http://www.bls.gov/news.release/empsit.t12. htm; European Commission, EU economic data pocketbook-Issue number 4-2008 (Luxembourg: Eurostat, April 2009). 43. OECD, “Key Employment Statistics,” 2008, http://www.oecd.org/document /53/0,3343,en_2649_39023495_42788213_1_1_1_1,00.html. 44. Susan E. Fleck, “International Comparisons of Hours Worked: An Assessment of the Statistics,” Monthly Labor Review, May 2009, p. 25, http://www.bls. gov/opub/mlr/2009/05/art1full.pdf 45. Dan Bilefsky, “Top EU Court Backs Mandatory Retirement Age of 65,” New York Times, October 16, 2007, http://www.nytimes.com/2007/10/16/ business/worldbusiness/ 16iht-retire.4.7913965.html. 46. Financial Times/Harris Poll, “Germans, French and Spanish Adults Oppose Working Past Retirement Age for Larger Pensions While American, British and Italian Adults Support Idea,” news release, May 27, 2009, http://www. harrisinteractive.com/news/FTHarrisPoll/HI_FinancialTimes_Harris_ Poll_May_2009_27.pdf. 47. Yann Algan and Pierre Cahuc, “Civic Attitudes and the Design of Labor Market Institutions: Which Countries Can Implement the Danish Flexicurity Model?” Discussion Paper 1928 (Bonn: IZA January 2006). http://www.iza.org/index_html?lang=en&mainframe=http%3A//www.iza. org/en/webcontent/publications/papers/viewAbstract%3Fdp_id%3D192 8&topSelect=publications&subSelect=papers. Various papers on this subject are available at the University of Saarbrucken, Attac European Summer

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48.

49.

50. 51.

52.

53.

54.

55. 56. 57.

58.

59.

Notes University Forum, http://www.european-summer-university.eu/pages/projects/flexicurity.php. “Minijobs” are not subject to income tax, no administrative tasks, and small employer tax. A German officials estimates that “In 2004, minijobs accounted for about 12 percent of employment, and 37 percent of minijobs went to people who had another job.” Fleck, “International Comparisons of Hours Worked,” p. 25. Article 17 explains allowed derogations, which include nearly all issues of rest and work hours. Council Directive concerning certain aspects of the organization of working time 93/104/EC, Official Journal of the European Union L 307 (December 13, 1993), p. 18. Fleck, “International Comparisons of Hours Worked,” p. 3. BBC News, World Report, May 8, 2009. The OECD showed Sweden and the United States averaging the same number of days lost, with the UK lower and France only slightly higher. OECD, “Days lost per 1,000 workers, 1994– 1999,” Table D1, www.oecd.org/dataoecd/61/30/1875523.xls. Susan Fleck raises a host of problems with collecting data on hours worked and argues that while labor force surveys, rather than employer provided information, cover “the self-employed and unpaid family workers” limitations such as irregular data collection and reliance on respondents’ memories for how much they work contribute to potential inaccuracies. “International Comparisons of Hours Worked,” p. 7. US Bureau of Labor Statistics, “A Chartbook of International Labor Comparisons,” March 2009, Section 1:1, 1:2, http://www.bls.gov/fls/chartbook2009/home.htm; My home state, Pennsylvania, exports high-tech locomotives to China because the American trains are more efficient, and thus cost-effective, even as Chinese wages are one-tenth of those in Erie, PA. Rush Limbaugh quoted in J. Naureckas, S. Rendell, and J. Cohen, The Way Things Aren’t: Rush Limbaugh’s Reign of Error (New York: The New Press, 1995), p. 22. EU economic data pocketbook-Issue number 4-2008. Robin Blackburn, Banking on Death: Or, Investing in Life: The History and Future of Pensions (London, New York: Verso, 2002) p. 201, Table 3.2. Fredrik Erixon, “Globalization, Earnings and Consumer Prices: Taking Stock of the Benefits from Global Economic Integration,” Policy Briefs no. 05 (Brussels: European Center for International Political Economy, 2008). Information on declining food prices is from this source as well. US Census Bureau, “Income Poverty and Health Insurance Coverage in the United States: 2007,” Table 2, 2008, http://www.census.gov/prod/2008pubs/ p60-235.pdf; John Thornhill, “Income Inequality Seen as the Great Divide,” Financial Times, May 19, 2008, p. 5; EU Economic Pocket book 4-2008; Marckus Gangl, “A Longitudinal Perspective on Income Inequality in the United States and Europe” Focus 26, no. 1 (2008), p. 37. European Commission, Taxation Trends in the European Union Data for EU Member States and Norway (Luxembourg: Eurostat, 2009), http:// epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-DU-09– 001/EN/

Notes

60.

61. 62. 63. 64.

65.

66.

67.

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KS-DU-09–001-EN.PDF. The European Court of Justice has ruled that each country decides personal tax rates but must respect the fundamental treaty principles on the free movement of workers, services, and capital and the freedom of establishment, and cannot directly or indirectly discriminate against any European citizen. European Commission, “Taxation and Customs Union,” General Overview, http://ec.europa.eu/taxation_ customs/taxation/personal_tax/gen_overview/index_en.htm. The effective tax rate in the United States on the same income would be roughly 16 percent. “In 2007, the overall tax ratio, i.e. the sum of taxes and social security contributions in the 27 Member States (EU-27) amounted to 39.8 percent of GDP (in the weighted average); this value is about 12 percentage points above those recorded in the United States and Japan.” European Commission, Taxation Trends in the European Union, p. 5. Michael Elliott, “Europeans Just Want to Have Fun,” Time Magazine, July 21, 2003, p. 8. OECD, Factbook 2009, Table: hours worked, http://oberon.sourceoecd.org/ vl=17423126/cl=11/nw=1/rpsv/factbook2009/06/03/02/index.htm. European Commission, Taxation Trends in the European Union. Cf. Andrew Moravcsik, “The Golden Moment. As the EU celebrates its 50th birthday, critics say it has one foot in the grave. But many countries now look there, not to America, as a model.” Newsweek, Web Exclusive, August 21, 2007, http://www.newsweek.com/id/36126. In Eastern Europe there is also the legacy of state-centric societies. For example, Juan Linz and Alfred Stepan, Problems of Democratic Transition and Consolidation: Southern Europe, South America, and Post-Communist Europe (Washington DC: John Hopkins University Press, 1996) convincingly show how the socialist era left substantial legacies in that much of civil society (religious groups, volunteer organizations, sports, culture, etc.) were materially tied to the state, with government aid and subsidies flowing to participants. The ingrained expectation that certain services be provided by the state, and lack of experience with competition in areas we take for granted (e.g., shipping, phone service) had to be gradually overcome. US Department of Education, “Education Indicators: An International Perspective,” Key Findings, 2004, http://nces.ed.gov/surveys/international/ IntlIndicators/index.asp?SectionNumber=1&SubSectionNumber=5&Indicat orNumber=105; OECD, Education at a Glance 2006 (Paris: OECD, 2006), http://www.oecd.org/document/52/0,3343,en_2649_39263238_37328564_ 1_1_1_1,00.html. Bela Galgoczi, “Wage Trends in Central and Eastern Europe” International Labor Organization Labour Education 128 (2002), http://www.ilo.org/public/ english/dialogue/ actrav/publ/128/8.pdf. The Value Added Tax, or VAT, in the EU is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the community. There is only a minimum rate of 15 percent, but countries

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are allowed certain exceptions, and most countries have much lower taxes on the things most people buy, such as food and restaurants, pharmaceuticals. EU Commission, “Taxation and Customs Union.” 68. European Commission, Taxation Trends in the European Union, p. 35; The White House, Office of Management and Budget, “Rewrite Budget Fiscal Year 2009,” http://www.whitehouse.gov/omb/rewrite/ budget/fy2009/ summarytables.html. 69. European Commission, Taxation Trends in the European Union, pp. 41, 86. 70. Stefan Wagstyl and Robert Anderson, “A Lat to Worry About,” Financial Times, June 17, 2009, p. 7.

5

High-Tech Gizmos, Web-Surfing, Cells, and Not-So Green Power

1. Denis Boyle comment on the “Eur-old . . . and in the way,” the Sharpknife blog, comment posted October 1, 2004, http://sharpknife.blogspot. com/2004_10_01_archive.html. 2. European Commission, “Bilateral Trade Relations: USA,” http://trade. ec.europa.eu/doclib/docs/2006/september/tradoc_113465.pdf. 3. Microsoft Corporation, Mutual Benefit—Microsoft’s Investment in European Innovation,” news release February 10, 2008, http://www.microsoft.com/ emea/presscentre/pressreleases/021008_MutualBenefitFS.mspx. 4. World Economic Forum, “Nordic Countries Continue to Lead the Way on EU ‘Lisbon Goals,’ ” news release, October 27, 2008, http://www.weforum. org/en/media/Latest%20Press%20Releases/PR_Lisbon. 5. Bruno Lanvin and Nils Fonstad Who Care? Who Dares? Providing the Skills for an Innovative and Sustainable Europe (Paris: Insead, Background Report prepared for the European Business Summit, March 27, 2009), http://www.insead.edu/facultyresearch/centres/elab/rightnav/documents/ EBSeskillsfinal.pdf. 6. Giovanni Dosi, Patrick Llerena, and Mauro Sylos Labini, “Evaluating and Comparing the innovation performance of the United States and the European Union” (Paper presented at the TrendChart Policy Workshop, Brussels, June 29, 2005), pp. 20–22, http://www.euroqualityfiles.net/cecistnet/FP6-FP7portals/IST-ICT/Report/EIS%202005%20EU%20versus%20US.pdf. 7. S. Giesecke, “The Contrasting Roles of Government in the Development of Biotechnology Industry in the US and Germany,” Research Policy, 29 (2000), pp. 207–209. 8. Claire Champenois, Dirk Engel, and Oliver Heneric, “The Birth of German Biotechnology Industry: Did Venture Capital Run the Show?,” Applied Economics 38, no. 5 (2006), pp. 505–518. 9. European Commission, Eurobarometer 63, June 2005, p. 51, http://ec.europa. eu/public_opinion/archives/eb/eb63/eb63_en.htm.

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10. Robert G. Kaiser, “Innovation Gives Finland a Firm Grasp on Its Future,” Washington Post, July 14, 2005, p. A21. 11. European Commission, Statistics in Focus 107/2008 (Luxembourg: Eurostat 2008), http://www.eurosfaire.prd.fr/7pc/doc/1228213979_ks_sf_08_107_ en.pdf. 12. Ibid; OECD, “The Global Competition for Talent,” Policy Brief February (Paris: OECD, 2009), http://www.oecd.org/dataoecd/58/50/42259140. pdf; Cf. OECD, Briefing Notes for the United States (Paris, OECD, 2005). When combining patenting at the EPO and at the United States Patent and Trademark Office, the United States, Germany, and Japan are worldwide leaders. According to one large report, patents owned by universities were only 2.9 percent in the EU and 6 percent in the United States. OECD, Compendium of Patent Statistics 2008 (Paris: OECD, 2008), http://www. oecd.org/dataoecd/5/19/37569377.pdf. 13. Lisbet Gronlund, David Lochbaum, and David Lyman, “Nuclear Power in a Warming World. Assessing the Risks, Addressing the Challenges,” (Cambridge, MA: Union of Concerned Scientists Publications, 2007), p. 7. 14. Aleksander Kovacevic, “Computer Game Nation” Sweden.se Business, July 10, 2009, http://www.sweden.se/eng/Home/Business/Reading/Computer-gamenation/. 15. “Very Handy,” Economist, June 6, 2009, special section The Economist Technology Quarterly, p. 4. 16. European Commission, “8 EU Member States Ahead of the US in Broadband Deployment Says Commission’s Telecoms Report,” news release, March 19, 2008, http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/460&f ormat=HTML&aged=0&language=EN. 17. OECD, “2008 Broadband Portal,” news release, December 2008, http://www. oecd.org/document/4/0,3343,en_2649_34225_42800196_1_1_1_1,00.html. 18. Associated Press, “Swedish Woman Gets World’s Fastest Internet Connection” USAToday, July 19, 2007, http://www.usatoday.com/tech/webguide/ internetlife/2007–07–19-swedish-woman-fast-internet_N.htm. 19. European Commission, Flash Eurobarometer 250 (Budapest: Gallup Organization, May 2009), p. 7. 20. Soumitra Dutta and Irene Mia eds., The Global Information Technology Report Mobility in a Networked World (Paris: Insead and World Economic Forum, 2009), p. xii. 21. OECD, Factbook 2009 (Paris: OECD, Economic, Environmental, and Social Statistics, 2009). 22. Simon Talyor, “Council Approves €4 bn for Energy Projects,” European Voice. com, July 7, 2009, http://www.europeanvoice.com/article/2009/07/councilapproves-%E2%82%AC4-bn-for-energy-projects/65420.aspx. 23. Secretary Hilda L. Solis interviewed by Steven Scully, C-Span Newsmakers, June 5, 2009. 24. Rush Limbaugh, “McCain’s ‘New Europe’ Address,” The Rush Limbaugh Show, March 26, 2008, http://www.rushlimbaugh.com/home/daily/site_032608/ content/01125116.guest.html.

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25. European Commission, Green Paper: A European Strategy for Sustainable, Competitive and Secure Energy (Brussels: European Commission, 2006), http://ec.europa.eu/energy/green-paper-energy/doc/2006_03_08_gp_ document_en.pdf. 26. Tim Montague, “Scandinavian Countries Are First in Creating Sustainable Communities,” CityMayors.com, November 7, 2006, http://www.citymayors. com/environment/sustainable-communities.html. 27. Robert Anderson, “Sweden Sees Role as EU Model,” Financial Times, June 17, 2009, p. 4. 28. Laurie Goering, “Going Green: Entire Swedish City Switches to Biofuels to Become Environmentally Friendly” Chicago Tribune, March 3, 2009, http:// archives.chicagotribune.com/2009/mar/03/nation/chi-sweden-carbonfree_ goeringmar03. 29. Mariah Blake, “Germany’s Key to Green Energy,” Christian Science Monitor, August 20, 2008, http://features.csmonitor.com/environment/ 2008/08/20/ germany%E2%80%99s-key-to-green-energy. 30. Wharton School of Business, “Going Green: Why Germany Has the Inside Track to Lead a New Industrial Revolution,” knowledge@wharton, April 7, 2009, http://knowledge.wharton.upenn.edu/article.cfm?articleid=2201; German Federal Ministry for the Environment, “Electricity from Renewable Energy Sources What Does It Cost Us?” Nature Conservation and Nuclear Safety, 2008, http://www.erneuerbareenergien.de; Cécile Bordier, “Development of Renewable Energies in France: What Contribution from the Carbon Market,” Wind-works.org, July 3, 2009, http://www.wind-works.org/ FeedLaws/ France/DevelopmentofRenewableEnergiesinFrance.html. 31. “Recycling around the World,” BBC News, June 25, 2005 http://news.bbc. co.uk/2/hi/europe/4620041.stm. 32. European Commission, Eurobarometer 63, June 2005, pp. 22, 26 q. 16, http:// ec.europa.eu/public_opinion/archives/eb/eb63/eb63_en.htm. 33. Ibid; European Commission, Eurobarometer 66, Summer 2006, pp. 68–69, http://ec.europa.eu/public_opinion/index_en.htm. 34. In the long term, at a yet undecided date, and likely when the scheme goes global, these credits are meant to be auctioned with revenues partially offsetting the cost of development in poorer countries. 35. A. Denny Ellerman and Paul L. Joskow, “The European Union’s Emissions Trading System in Perspective,” news release, the Pew Research Center on Global Climate Change, a project of the Pew Research Center, May 8, 2008, http://www.pewclimate.org/press-releases/05.08.08. 36. E.g., Laurie Williams and Allan Zabel, “Cap-and-trade Does More Harm Than Good Bill Offers Incentives for Businesses That Pollute,” Philadelphia Inquirer, June 24, 2009, http://www.philly.com/inquirer/opinion/20090624_ Cap-and-trade_does_more_harm_than_good.html accessed. 37. “Emissions Don’t Make Europe Happy,” BBC News UK, July 15, 2007, http:// news.bbc.co.uk/2/hi/science/nature/6897485.stm. 38. Mure Dickie, “Tokyo Seeks to Fulfill Its Low-Carbon Vision,” Financial Times, June 11, 2009, p. 3.

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39. Renata Goldivora, “EU-backed Nabucco to Receive Legal Certainty,” EUObserver, July 13, 2009, http://euobserver.com/9/28445/?rk=1. 40. European Commission, “Commission Acts to Ensure Effective and Competitive Energy Market across Europe,” news release, June 25, 2009, http://europa.eu/ rapid/pressReleasesAction.do?reference=IP/09/1035&format=HTML&aged=0 &language=EN&guiLanguage=en. 41. Fiona Harvey, Chris Bryant, and Kathrine Hille, “Feeling the heat,” Financial Times, June 2, 2009, p. 5; Steve Howard and Changhua Wu, China’s Clean Revolution (Beijing: The Climate Group, 2008). 42. Kate Connolly, “Germany Deals Blow to GM Crops Agriculture Minister Ilse Aigner Joins European Mutiny over Genetically Modified Crops by Banning Corn Variety MON 810,” Guardian, April 14, 2009, http://www.guardian. co.uk/environment/2009/apr/14/germany-gm-crops.

6

The Things We Want in Life: Health, Security, Work, Culture, and Quality

1. Rush Limbaugh, “Europe-Loving Justice Kennedy: Hero of Terrorists, Child Rapists,” The Rush Limbaugh Show, June 25, 2008, http://www.rushlimbaugh.com/home/daily/site_062508/content/01125106.guest.html; Kim Holmes,”Outlook for the Transatlantic Alliance,” American Political Science Association European Politics and Society Newsletter (Spring/Summer, 2008), pp. 13–15; Mark Steyn interviewed by Harry Kreisler, Conversations with History, UC Berkely, The Fall of Europe and the Coming of Eurabia, part 2, UCTV video, April 2007, posted 2008, http://www.youtube.com/ watch?v=ffJ2u9UV 5Pw&NR=1; Dick Morris, “The Obama Presidency: Here Comes Socialism,” TheHill.com, January 20, 2009, http://thehill.com/dickmorris/the-obama-presidency-here-comes-socialism-2009-01-20.html. 2. Thomas Harjes, “Gobalization and Income Inequality: A European Perspective,” Working Paper 07/169 (International Monetary Fund, 2007), www.imf.org/external/pubs/ft/wp/2007/wp07169.pdf. 3. T. H. Green (1836–1882) argued that a human can only be free within a genuinely social community. See e.g., Mark H. Hagopian, Ideals and Ideologies of Modern Politics (New York: Longman, 1985), pp. 177–179. Though necessarily insufficient and rough, the two views of humans are as follows. We are good, trustworthy, and social creators who can maximize talent and prosperity only when working together and utilizing different skills, thus we voluntarily erect government as a way of enabling humans to fulfill their potential (this view has strong roots in the writings of John Locke). The opposite view of human nature asserts we are predominantly self-interested, and willing to do anything to satisfy our own desires. Because everyone else is believed to think like you, suspicion reigns, and the erection of government is first and foremost a necessity, a surrender of some personal freedom

196

4.

5.

6.

7.

8.

9. 10.

11.

12.

Notes in exchange for security from others so that everyone can pursue their goals. Ask yourself: If humans correspond to the first view, why do we lock our cars and homes? If we are of the second nature, why is there charity? Why do volunteers work? These different theories of human nature lead to different ideologies. Answer a few questions on issues of importance to you and your ideology will begin to appear: If you were king for a day what would you do? Who should govern? Is education a right or a privilege? What is the role of government versus individuals? Today poor and politically left-leaning Europeans still show a strong aversion to inequality, while in the United States, it is only the rich who display aversion to inequality. Alberto Alesina, Rafael Di Tella, and Robert MacCulloch, “Inequality and Happiness: Are Europeans and Americans Different?,” Journal of Public Economics 88 (2004), pp. 2009–2042. A welfare regime is “the institutional arrangements, rules and understandings that guide and shape concurrent social policy decisions, expenditure developments, problem definitions, and even the respond-and demand structure of citizens and welfare consumers.” G. Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge, MA: Polity Press, 1990), p. 18. The three models are based on Esping-Anderson, and W. Arts, and J. Gelissen, “Three Worlds of Welfare Capitalism or More?” Journal of European Social Policy 12, no. 2 (2002), pp. 137–158; G. Esping-Andersen, ed. Welfare States in Transition: National Adaptations in Global Economies (London: Sage, 1996). European Commission, “EU27 Spent 26.9% of GDP on Social Protection,” Eurostat news release, June 2, 2009, http://epp.eurostat.ec.europa.eu/cache/ ITY_PUBLIC/3-02062009-BP/EN/3-02062009-BP-EN.PDF. The same source for figures cited in the following paragraph. E.g., H. J. M. Fenger, “Welfare Regimes in Central and Eastern Europe: Incorporating Post-Communist Countries in a Welfare Regime Typology,” Contemporary Issues and Ideas in Social Sciences 3, no. 2 (2007), pp. 2–30. Alberto Alesina and Edward Ludwig Glaeser, Fighting Poverty in the US and Europe: A World of Difference (New York: Oxford University Press, 2004), chap. 2; Markus M. L. Crepaz, “Veto Players, Globalization and the Redistributive Capacity of the State: A Panel Study of 15 OECD Countries,” Journal of Public Policy 21 (2001), pp. 1–22. Ibid. René Böheim and Ana Rute Cardoso,”Temporary Help Services Employment in Portugal, 1995–2000” (Paper presented at the National Bureau of Economic Research Conference on Labor Market Intermediation, Ohio State University, OH, May 17–18, 2007). “Italy: Government Launches Plans for Reform of Public Sector Employment,” European Industrial Relations Observatory Online, September 29, 2008, http:// www.eurofound.europa.eu/eiro/2008/09/index.htm. “Labor Market Reform Agreed,” European Industrial Relations Observatory Online, October 10, 2002, http://www.eurofound.europa.eu/eiro/2002/10/ feature/dk0210102f.htm.

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13. Chris Bryant and Gerrit Wiesmann, “Germany’s Short-time Workers Ease Jobs Crisis,” Financial Times, May 1, 2009, p. 5. 14. Matthias Pollmann-Schult, “Unemployment Benefits, Unemployment Duration and Subsequent Job Quality,” Acta Sociologica 48, no. 1 (2005), pp. 21–39. 15. OECD, Pensions at a Glance 2009: Retirement-Income Systems in OECD Countries (Paris: OECD, 2009), http://www.oecd.org/document/49/0,334 , en_2649_3475742992113_1_1_1_37411,00.html; European Commission, “Expenditure on Pensions,” Eurostat, 2006, http://epp.eurostat.ec.europa.eu/ portal/page/portal/product_details /dataset?p_product_code=TPS00103. 16. Didier Blanchet, “Pension Reforms in Europe,” Intereconomics 40, no. 5 (2005), pp. 244–272; Reuters, “FACTBOX-Pension Reform around Europe,” May 22, 2008, http://uk.reuters.com/article/idUK L2238499820080522; 17. Pensions at a Glance 2009. 18. United Nations Secretariat, Department of Economic and Social Affairs, Population Division, Replacement Migration: Is It a Solution to Declining and Aging Populations? ST/ESA/SER.A/206, New York, 2001, Executive Summary, pp. 1–5. Some research indicates that America’s social security can be fixed with a slightly less steep rise in pension age, cf. Edward Luce, “Deficit disorder,” Financial Times, June 26, 2009, p. 7. 19. US Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States 2007,” Table 3, 2008. 20. The Program for International Student Assessment tests 400,000 students from 57 countries. US Department of Education, “Highlights from PISA 2006: Performance of US 15-Year-Old Students in Science and Mathematics Literacy in an International Context,” National Center for Education Statistics, 2008, http://nces.ed.gov/pubs2008/2008016_1.pdf. 21. Ellen Gamerman, “What Makes Finnish Kids So Smart? Finland’s teens score extraordinarily high on an international test. American educators are trying to figure out why,” Wall Street Journal Business, February 29, 2008, http://online.wsj.com/public/article_print/SB120425355065601997.html; “Education Reform Learning Lessons from Abroad,” Economist, June 26, 2008, http:// www.economist.com/displayStory.cfm?Story_ID=E1_TTGNNPRP. 22. Richard Milne and Andrew Ward, “Illuminating Outline,” Financial Times, July 30, 2009, p. 7. 23. Anthony Giddens, “There Is a Law of the Labour Back Benches: If They Do It in Sweden, It Must Be All Right,” New Statesman, September 6, 2004, http://www.newstatesman.com/200409060020; The Frontier Center for Public Policy, The Public School Market in the Netherlands, Background Brief Analysis (Winnipeg, Canada, The Frontier Center for Public Policy, 2003), http://www.fcpp.org/pdf/FB16%20Dutch%20School%20Model.pdf. 24. OECD, “Higher Education and Region,” Policy Brief (Paris: OECD, 2007). 25. Financial Times/Harris Poll, “Germans, French and Spanish Adults Oppose Working Past Retirement Age for Larger Pensions While American, British and Italian Adults Support Idea,” news release, May 27, 2009, http://www. harrisinteractive.com/news/FTHarrisPoll/HI_FinancialTimes_Harris_ Poll_May_2009_27.pdf.

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26. Mark Levin, “Mark Levin Telling It Like It Is about Healthcare to a Lib,” The Mark Levin Show, June 8, 2007, http://www.youtube.com/ watch?v=oV13Fhh8xzg; William Tauzin, President and CEO Pharmaceutical Research and Manufacturers of America interviewed by Drew Armstrong on C-Span Newsmakers, June 3, 2009, http://www.c-spanarchives.org/ library/index.php?main_page=product_video_info&products_id=284480-1&highlight=Newsmakers; Mark Steyn, “Live Free or Die!” Imprimis 38, no. 4 (2009); Reader response to my article “Is Socialized Medicine the Next Move for US?” Pocono Record, September 23, 2008, http://www.poconorecord.com/ apps /pbcs.dll/article?AID=/20080923/NEWS04/809230310. 27. “American Hospital Investigation,” CNN International, Paris, France, May 7, 2009. 28. Swiss Conservative President Couchepin interviewed by T. R. Reid, Sick around the World, WGBH Frontline in coproduction with Palfreman Film Group, Airdate April 15, 2008, http://www.pbs.org/wgbh/pages/frontline/ sickaroundtheworld/. 29. “Live Free or Die!” 30. “Obese Patients Denied Operations,” BBC News, November 23, 2005, http:// news.bbc.co.uk/2/hi/uk_news/england/suffolk/4462310.stm. 31. J. R. H. Foran, Michael A. Mont, Gracia Etienne, Lynne C. Jones, and David S. Hungerford, “The Outcome of Total Knee Replacements in Obese Patients,” Journal of Bone and Joint Surgery 86 (2004), pp. 1609–1616. 32. Lori Achman and Bebra Chollet, Insuring the Uninsurable: An Overview of State High-Risk Pools (New York: The Common Wealth Fund, August 1, 2001), http://www.commonwealthfund.org/~/media/Files/Publications/ Fund%20Report/2001/Aug/Insuring%20the%20Uninsurable%20%20 An%20Overview%20of%20State%20High%20Risk%20Pools/achman_ uninsurable_472%20pdf.pdf. C. L. Edelman and C. L. Mandle, Health Promotion: Throughout the Life Span (St. Louis: Elsevier Mosby, 2006); Tsion Berhanu, Anne Dean, Shaneen Fernandez, Rebecca Khim, Carrie Philips, and Andrea Zipperar, “Health Insurance Coverage and Self-Influenced Behaviors,” (Paper presented to Dr. Patsy Maloney, at Pacific Lutheran University Professional Foundations I, November 26, 2006). 33. OECD Health Data 2009, www.oecd.org/health/healthdata . 34. “US Trails Others in Healthcare Satisfaction” Fox News, October 29, 2004, http://www.foxnews.com/story/0,2933,136990,00.html; The Commonwealth Fund, International Health Policy Survey of Primary Care in Five Countries (New York: Commonwealth Fund, October 28, 2004); R. Blendon, Cathy Schoen, Catherine DesRoches, Robin Osborne, Kimberly L. Scoles, and Kinga Zapert, “Inequalities in Health Care: A Five-Country Study,” Health Affairs 21, no. 3 (2002), pp. 182–191. 35. Reid, Sick around the World. 36. Interviewed by John Harwood, CNBC Reports, June 17, 2009. 37. US Census Bureau, “Income Poverty and Health Insurance Coverage in the United States: 2007,” Number Uninsured and Uninsured Rate: 1987 to 2007 figure 6, 2008; another 6–10 percent of Americans are estimated

Notes

38. 39.

40. 41.

42. 43.

44.

45. 46.

47.

48.

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to be underinsured. Commonwealth Fund, How Many Are Underinsured? Trends among US Adults, 2003 and 2007 (New York: Commonwealth Fund, 2008). Note, Europe and the United States have roughly the same rate of increase in total national spending as a percentage of GDP, but in the United States this is achieved by having fewer people covered, and thus get treatment. OECD Health Data 2009, www.oecd.org/health/healthdata. E.g., Reed Abelson, “Insured But Bankrupted by Health Crisis,” New York Times, June 30, 2009, front page; Jon Palfreman, Sick around America, WGBH, Frontline in coproduction with Palfreman Film Group, Airdate March 31, 2009, http://www.pbs.org/wgbh/pages/frontline/ sickaroundamerica/view/. OECD, The NHS: An Economic Health Check, Policy Brief (Paris: OECD, June 2009). Rush Limbaugh, “Mrs. Clinton: $5,000 for Every Baby,” The Rush Limbaugh Show, September 28, 2007, http://www.rushlimbaugh.com/home/daily/ site_092807/content/01125112.guest.html. Interview with American student in Paris, May 2009. European Parliament, “The Impact of the European Court of Justice Case Law on National Systems for Cross-Border Health Service Provision,” Committee on Internal Market and Consumer Protection Briefing Note (Brussels: European Parliament, 2006), http://www.europarl.europa.eu/comparl/imco/studies/0701_healthserv_briefingnote_en.pdf. “The Doctor Will See You-In Three Months,” Business Week, July 9, 2007, http://www.businessweek.com/magazine/content/07_28/b4042072.htm; “Heading for the Emergency Room,” Economist, June 27, 2009; “Bibliography: Wait Times for Primary Hip and Knee Replacement Surgery (Boston: Veterans Affairs Technology Assistance Program, 2006), http://www.va.gov/vatap/ pubs/BIB-Waiting-times-for-joint-replacement-surgery-final.pdf; Britain’s National Health Services, “NHS Waiting Times Q& A, 2009, http://www. nhs.uk/news/2009/03march/pages/nhswaitingtimesqa.aspx. “Heading for the Emergency Room”. Jeremny Hurst, “Challenges for Health Systems in Member Countries of the Organisation for Economic Co-operation and Development,” Bulletin of the World Health Organization, 78 (2000), p. 765; Anecdotally Imai and Lenain report that “France is regarded as delivering high quality services, with freedom of choice and generally no waiting lists for treatments.” Y. Imai, S. Jacobzone, and P. Lenain, “The Changing Health System in France,” Working papers, no. 269 (Paris: OECD, 2000), p. 2. The Common Wealth Fund, First State-by-State Health System Scorecard to Focus on Children Finds Wide Differences in Health Care (New York: Common Wealth Fund, May 28, 2008). These country paragraphs draw on the following sources. OECD, Private Health Insurance in OECD Countries, Policy Brief (Paris: OECD, September 2004), http://www.oecd.org/dataoecd/42/6/33820355.pdf; Eurostat, “Health Indicators,” 2008, http://epp.eurostat.ec.europa.eu/portal/page/portal/ health/public_health/main_tables; OECD Health Data 2009; US Social

200

49. 50. 51.

52.

53.

54.

55.

56.

57. 58.

59. 60.

Notes Security Administration, “Fact Sheets Germany,” 2009, http://www.ssa.gov/ policy/docs/progdesc/ssptw/2008–2009/europe/germany.html; Sick around the World. The NHS: An Economic Health Check. E.g., Sean Hannity, “The Sean Hannity Show,” Fox News, August 12, 2009; Glenn Beck, “The Glenn Beck Show,” Fox News, August 7, 2009. “A Private Matter: the Czech Health Care,” Economist, May 28, 1994, p. 19; Financial Sustainability of the Czech Healthcare System until 2050 (Prague: Working Team of the Roundtable project, February 19, 2009), http://www. kulatystul.cz/en/ system/files/Model+2050.pdf. I posted a commentary in my regional paper on what I perceived to be widespread public complacency when the government in September 2008 used tax payers’ money to bail out anyone and everyone who had full-heartedly engaged in speculative financial investments. I also added that perhaps we ought to socialize healthcare now that the economy had been de facto nationalized (“Is Socialized Medicine the Next Move for the US?” Pocono Record, September 23, 2008, p. 8). I offered evidence of the cheaper costs, private sector dominance, and greater efficiency in many other developed, capitalist democracies. The responses from readers are indicative of the misperceptions of how universal care can work and its costs. Here are some online responses (aliases removed). September 23, 2008, 09:25 am: “Over 85% of the people in this country have health insurance and everyone has health care. Of the so called 40 million without it, 25 million are illegals and many of the rest are under 30 years old and don’t want it.” September 23, 2008, 09:44 am: “The lawyers and doctors won’t allow it, because they would lose big money. Taxes in Germany were 47% last time I talked to the relatives there, Wait to Government has to buy out the Health Industry then maybe that’s their plan.” “Poll: Majority Would Pay Higher Taxes for Universal Health Care,” New York Times/CBS Poll, April 6, 2009, http://www.cbsnews.com/blogs/ 2009/04/06/politics/politicalhotsheet/entry4923731.shtml. Live Free or Die!” pp. 6–7; Christopher Caldwell, “Europe Needs to Get Real,” Time Magazine, January 12, 2003, http://www.time.com/time/europe/ magazine/2003/0120/cover/view_caldwell.html. “Religious Fervor in US Surpasses Faith in Many Other Highly Industrial Countries,” AP/Ipsos Poll, June 6, 2005, at http://www.ipsos-na.com/news/ pressrelease.cfm?id=2694. Noelle Knox, “Religion Takes a Back Seat in Western Europe,” USAToday, August 10, 2005 at http://www.usatoday.com/news/world/2005-08-10europe-religion-cover_x.htm. European Commission, Eurobarometer 63, Spring 2005, p. 32. Jeffery M. Jones, “Tracking Religious Affiliation, State by State,” Gallup, June 22, 2004, http://www.gallup.com/poll/12091/Tracking-ReligiousAffiliation-State-State.aspx. “Europe Needs to Get Real.” Simon Kuper, “The Myth of Eurabia,” Financial Times, October 3–4, 2009, Life and Arts, pp. 1–2.

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61. Eurobarometer 63. 62. European Commission, Eurobarometer 66, 2006, p. 45. 63. Robert Manchin, “Religion in Europe: Trust Not Filling the Pews,” Gallup, 2004, http://www.gallup.com/poll/13117/Religion-Europe-Trust-FillingPews.aspx. 64. Todd Donovan, David Denemark, and Shaun Bowler, Trust in Government: The United States in Comparative Perspective in The Elements of Social Scientific Thinking, 9th ed. Kenneth Hoover and Todd Donovan (Multiple: ThomsonWadsworth, 2007), appendix B; Cf. Jurg Steiner and Markus M. L. Crepaz, European Democracies 5th ed. (Multiple: Pearson Longman, 2007), chap.15. The rest of the data in this paragraph come from European Commission, Special Eurobarometer 225, 2005; European Commission, Eurobarometer 66, 2006. 65. “World Publics Welcome Trade—But Not Immigration,” October 4, 2007, Pew Research Center’s Global Attitudes Project. 66. Lisa A. Keister, “Religion and Wealth: The Role of Religious Affiliation and Participation in Early Adult Asset Accumulation,” Social Forces 82 (2003), pp. 173–205. 67. Brendan Conway, “Europe Today,” Washington Post, July 23, 2005, http:// www.washingtontimes.com/news/2005/jul/23/20050723-092117-9735r/; Mark Steyn quoted in Andrew Moravcsik, “The Golden Moment,” Newsweek, March 26, 2007, http://www.newsweek.com/id/36126. 68. European Commission, Key Figures on Europe 2007–2008 (Luxembourg: Eurostat, 2009) p. 55. 69. In October 2008, EU leaders agreed to the European Pact on Immigration and Asylum, a set of political commitments in five areas: regular and irregular immigration, border controls, asylum policies, and cooperation with countries of origin and of transit. The European Commission is by 2012 expected to table its proposal on a single asylum procedure, with common guarantees and uniform status for refugees. 70. European Commission, EU Economic Data Pocketbook no.4 (Luxembourg: Eurostat, April 2009); European Commission, Living Conditions in Europe 2003–2006 (Luxembourg: Eurostat, April 2009). 71. Labor migrants simply seeking economic opportunities lack rights to stay, but by claiming refugee status and seeking asylum a person is entitled to an investigation and hearing, because most European countries (not the Netherlands), like the United States, forbid deportation to countries where the seeker may face torture or death. 72. Hugo Brady, “EU Immigration Policy A-Z,” Briefing (Brussels: Center for European Reform, 2008), http://www.cer.org.uk; Council of the European Union, European Pact on Immigration and Asylum (Brussels: Council of the European Union, September 24, 2008). 73. Elitsa Vucheva, “Cool Reception to Compulsory EU Sharing of Asylum ‘burden,’ ” EUObserver.com, June 5, 2009, http://euobserver.com/9/28235. 74. Adam Sitte, “US, Canada Show More Interfaith Cohesion Than Europe,” Gallup, May 7, 2009, http://www.gallup.com/poll/118273/Canada-ShowInterfaith-Cohesion-Europe.aspx.

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75. “World Publics Welcome Trade—But Not Immigration.” 76. Sarah Lyall, “Sweden’s Lightning Rod in a Storm over Assimilation” New York Times Europe, January 13, 2007, http://www.nytimes.com/2007/01/13/ world/europe/13profile.html?scp=3&sq=Sweden%20%20open%20to%20 immigrants%22&st=cse. 77. Press Conference, August 5, 2005, http://www.number10.gov.uk/Page8041. 78. “In Quotes: French Muslim Voices,” BBC News Interviews, November 1, 2005, http://news.bbc.co.uk/2/hi/europe/4376500.stm. 79. John Lichfield, “Paris Suburbs on Brink as Riots Leave 82 Police Injured,” Independent, November 28, 2007, http://www.independent.co.uk/news/ world /europe/paris-suburbs-on-brink-as-riots-leave-82-police-injured760749.html. 80. Crepaz, European Democracies, p. 302. 81. “MPs Back French Immigration Bill,” BBCNews, May 18, 2006, http://news. bbc.co.uk/2/hi/europe/4990962.stm; “France Prepares New Anti-Riot Law,” BBCNews, October 30, 2006, http://news.bbc.co.uk/2/hi/europe/6098458. stm; Ruben Navarrette, “France on Fire: Joblessness and Discrimination Fueled Widespread Riots,” Current Events, December 9, 2005, p. 2. 82. “France’s immigration problem,” San Diego Union-Tribune, April 27, 2008. 83. Press conference, August 5, 2005; “Blair Warns of ‘duty’ to Integrate,” Politics.co.uk December 8, 2006, http://www.politics.co.uk/news/legal-and-constitutional/ blair-warns-of-duty-to-integrate-$460465.htm; Benjamin T. Bowyer, “The Contextual Determinants of Whites’ Racial Attitudes in England,” British Journal of Political Science 39 (2009), pp. 559–586. 84. “After His Crime Pledges, Cameron Talks Tough over ‘too many migrants’ ” Mail Online, August 30, 2007, http://www.dailymail.co.uk/news/article478543/A f ter-crime-pledges-Ca meron-ta lk s-tough-migra nts.html; “Immigration Survey,” Opinion Research Business, November 2007, http:// news.bbc.co.uk/2/shared/bsp/hi/pdfs/TABLESv3.pdf. 85. “Unfavorable Views of Jews and Muslims on the Increase in Europe,” Pew Research Center’s Global Attitudes Project, September 17, 2008, http:// pewglobal.org/reports/display.php?ReportID=262. 86. Karen Schönwälder, ed., “Residential Segregation and the Integration of Immigrants: Britain, the Netherlands and Sweden,” Discussion Paper SP IV (Berlin: Social Science Research Center, November 2007), http://www.wzb. eu/zkd/aki/files/iv07–602_segregation_three_countries.pdf. 87. International Crisis Group, “Islam and Identity in Germany” Europe Report no.181 (Berlin/Brussels: International Crisis Group, March 14, 2007), http:// www.crisisgroup.org/home/index.cfm?l=1&id=4693. 88. “World Publics Welcome Trade—But Not Immigration.”; European Commission, Eurobarometer 66, Summer 2006, p. 34. 89. European Commission, Eurobarometer 66, Summer 2006, p. 47; The German Marshalls Fund of the United Sates, “Transatlantic Trends 2008,” news release, 2008, http://www.transatlantictrends.org/trends/index.cfm?id=184. 90. Benjamin T. Bowyer, “The Contextual Determinants of Whites’ Racial Attitudes in England,” British Journal of Political Science 39 (2009),

Notes

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92.

93. 94.

95.

96. 97. 98.

99.

100. 101. 102. 103.

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pp. 559–586; Giulia Segreti, “Italy’s Foreign Entrepreneurs Show New Face of Immigration,” Financial Times, August 21, 2009, p. 3; Eurobarometer 66, p. 24. “EUICS report, The Burden of Crime in the EU: A Comparative Analysis of the European Survey of Crime and Safety (EU ICS) 2005”; EU economic data pocketbook 2008; Living Conditions in Europe 2003–2006. A British study found clear correlation between more education and lower crime rates. Ricardo Sabates, “Educational Attainment and Juvenile Crime Area-Level Evidence Using Three Cohorts of Young People,” British Journal of Criminology 48, no. 3 (2008), pp. 395–409. EUICS report, The Burden of Crime in the EU, p. 24. See the review of six books in Valentina Pasquali, “Mob Rule,” Foreign Policy (May/June 2009), pp. 61–62. The following sentences draw on this review. This should be compared to the estimated 14–16 percent of underground activity in the EU and United States generally. European Commission, “Towards a Comprehensive European Migration Policy: Cracking down on Employment of Illegal Immigrants and Fostering Circular Migration and Mobility Partnerships,’ news release, Brussels, May 16, 2007, http://europa.eu/ rapid/pressReleasesAction.do?reference=IP/07/678&format=HTML&aged =0&language=EN&guiLanguage=en; Cf. Kathleen Gallagher, “Economics scholar points to a surging underground economy,” Milwaukee Journal Sentinel, April 13, 2009, http://www.jsonline.com/business/42907332. html; Jim McTague, “Going Underground: America’s Shadow Economy,” Frontpagemag.com, January 6, 2005, http://www.frontpagemag.com/ readArticle.aspx?ARTID=10024; “Dozens Jailed in Italy Mafia Case,” BBC News, July 17, 2009, http://news. bbc.co.uk/2/hi/europe/8156906.stm. Eurobarometer 66, p. 34. Online Law Encyclopedia s.v. “Criminal Law Reform: Continental Europe—Criminal Law Reform In Continental Europe,” http://law.jrank. org/pages/860/Criminal-Law-Reform-Continental-Europe-Criminal-lawreform-in-continental-Europe.html#ixzz0NDtLqa1E. “White Collar Crime on the Rise,” The Budapest Sun, October 16, 2003, http://www.budapestsun.com/news/51678; Joanna Chung, “Regulators in Drive to Curb Corruption,” Financial Times, July 27, 2009, p. 2. Christopher Caldwell, “Myth and Reality of Terror,” Financial Times, July 8, 2005, p. 7. E.g., Mark Mulligan, “Mallorca Car Bomb Kills Two Officers,” Financial Times, July 31, 2009, p. 2. Andrew Willis, “Over 500 Planned Terrorist Attacks in EU in 2008,” EUObserver.com, April 17, 2009, http://euobserver.com/9/27956EU. Council of the European Union, A Secure Europe in a Better World: The European Security Strategy (Brussels: Council of the European Union, 2003), pp. 9–10, http://www.consilium.europa.eu/showPage.aspx?id= 266& lang=EN.

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104. Leif Johan Eliasson, “Regional Defense Policy: The European Security and Defense Policy,” in Jeffrey A. Weber and Leif Johan Eliasson, Handbook on Military Administration ed. (Bocan Raton, FL: Taylor and Francis CRC Press December 2007), pp. 320–321. 105. Evan Kohlmann cited in “How Europe’s Counterterrorism Laws Differ from America’s,” the Daniel Pipes blog comment posted July 3, 2008, http://www. danielpipes.org/blog/entry_print.php?id=854&v=6925028121. 106. Ibid. 107. Glenn Beck, “The Glenn Beck Show,” Fox News, March 19, 2009; David Brooks, “Fear and Rejection,” New York Times, June 2, 2005, http://www. nytimes.com/2005/06/02/opinion/02brooks.html?ex=1275364800&en=b2 95d28f147aa5b0&ei=5090&partner=rssuserland&emc=rss; Rush Limbaugh, “Europe-Loving Justice Kennedy: Hero of Terrorists, Child Rapists,” The Rush Limbaugh Show, transcript posted, June 25, 2008, http://www.rushlimbaugh.com/home/daily/site_062508/content/01125106.guest.html. 108. British Council, Talking Transatlantic (British Council, 2008), p. 12. 109. Kim Holmes, “Outlook for the Transatlantic Alliance,” American Political Science Association European Politics and Society Newsletter (Spring/Summer, 2008), pp. 13–17. 110. Cf. Mitchell P. Smith “Explaining Divergent Health and Environmental Regulation in the United States and the European Union,” European Studies Review Summer (2009), pp. 9–13. 111. Eckhardt Borchard and Sebastan Reinecke, Eating, Drinking, SmokingComparative Price Levels in 37 European Countries for 2006 (Luxembourg: European Commission, 2007), table 3, http://www.scb.se/statistik/PR/ PR0401/_documents/KS-SF-07-090-EN.pdf. 112. Eurobarometer 63, pp. 8–9. 113. University of Leicester, “University of Leicester Produces the First Ever World Map of Happiness: Happiness Is . . . Being Healthy, Wealthy and Wise,” press release, July 28, 2006, http://www2.le.ac.uk/ebulletin/news/pressreleases/2000-2009/2006/07/nparticle.2006-07-28.2448323827. “Trust in Government: The United States in Comparative Perspective.” 114. Arthur Brooks, “Happy for the Work” Wall Street Journal, June 20, 2007, http://online.wsj.com/article/SB118230180318341380-search.html?KEYW ORDS=Happy+Work&COLLECTION=wsjie/6month. 115. European Commission, Key Facts and Figures about Europe and the Europeans (Luxembourg: European Commission, 2007), http://europa.eu/abc/ keyfigures/index_en.htm. 116. International Parliamentary Union, “Women in National Parliaments,” July 31, 2009, http://www.ipu.org/wmn-e/classif.htm; Richard Milne, “Skirting the boards,” Financial Times, June 15, 2009, p. 5. 117. European Commission, Regions of the European Union a Statistical Portrait (Luxembourg: Eurostat, 2009), p. 16; Eurobarometer 63, p. 33. 118. Commission of the European Communities v Hellenic Republic (2009) C-559/07, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX: 62007J0559:EN:NOT.

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119. Jo Blanden, Paul Gregg, and Stephen Machin, Intergenerational Mobility in Europe and North America. A report submitted to the Sutton Trust (London: Center for Economic Performance 2005), http://www.suttontrust.com/ reports/IntergenerationalMobility.pdf; Marckus Gangl, “A Longitudinal Perspective on Income Inequality in the United States and Europe,” Focus 26, no. 1 (2008), p. 36. 120. Gangl, “A Longitudinal Perspective on Income”; Alberto Alesina and Edward Ludwig Glaeser, Fighting Poverty in the US and Europe: A World of Difference (New York: Oxford University Press, 2004), p. 58. 121. Pew Global Attitudes Project, A Pew Research Center Project, “A Rising Tide Lifts Mood in the Developing World Sharp Decline in Support for Suicide Bombing in Muslim Countries,” news release, July 27, 2007, http:// pewglobal.org/reports/display.php?ReportID=257.

7 Europe’s Global Tentacles Reach You Everywhere: Trade, Law, Business, Armaments, and Military Operations 1. Robert Kagan, “Power and Weakness: Why the United States and Europe See the World Differently,” Policy Review, no. 113 (2002), pp. 3–5, http:// www.hoover.org/publications/policyreview/3460246.html; Rush Limbaugh, “Citizen of the World Rips America,” The Rush Limbaugh Show, July 24, 2008, http://www.rushlimbaugh.com/home/daily/site_072408/content/01125114. guest.html. 2. Robert Kagan, “The September 12 Paradigm” Foreign Affairs 87, no. 5 (2008), pp. 25–39. 3. Kagan, “Power and Weakness.” 4. Cf. Anand Menon, Kalypso Nicolaids, and Jennifer Welsh, “In Defense of Europe: A Response to Kagan,” EU Policy Network 2–3 (2003), http://www. eupolicynetwork.org.uk/JEA2-3.pdf. 5. Joesph S. Nye, Jr. Soft Power: The Means to Succeed in World Politics (NY: PublicAffairs, 2005). 6. Rockwell A. Schnabel, The Next Superpower? The Rise of Europe and Its Challenge to the United States (Maryland: Rowman and Littlefield, 2005), p. 59. 7. European Commission, “External Trade,” Eurostat, 2008, http://epp.eurostat.ec.europa.eu/portal/page/portal/external_trade/introduction. 8. In the first quarter of 2009, Americans bought $4 bn, the US deficit with China was $ 50 bn, even as total trade was half as large as with the EU. European Commission, “Euro Area External Trade Surplus,” Eurostat, news release, June 17, 2009, http://epp.eurostat.ec.europa.eu/cache/ ITY_PUBLIC/6-17062009-AP/EN/6-17062009-AP-EN.PDF; US Census

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10.

11.

12.

13. 14.

15. 16. 17.

18.

19. 20.

21.

22.

23.

Notes Bureau, Foreign Trade Statistics, “Total Trade” March 2009, http://factfinder.census.gov/servlet/SAFFBusiness?_submenuId=business_4. Aoife White, “US, EU End Fight over Beef Imports,” May 6, 2009, Associated Press Business wire, http://www.manufacturing.net/News-US-EU-End-FightOver-Beef-Imports-050609.aspx?menuid=252. European Commission, External and Intra-European Union Trade—No. 3/2009 (Luxembourg: Eurostat, 2009), http://epp.eurostat.ec.europa.eu/ cache/ITY_OFFPUB/KS-SF-09-009/EN/KS-SF-09-009-EN.PDF. See e.g., Alan Beattie and Geoff Dyer, “China Boxes Clever in Trade Dispute with US,” Financial Times, September 15, 2009, p. 3; WTO Trade Disputes, http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm. Brandon Mitchener, “Standard Bearers: Increasingly, Rules of Global Economy Are Set in Brussels—to Farmers and Manufacturers, Satisfying EU Regulators Becomes a Crucial Concern—from Corn to SUV ‘Bull Bars,’ ” Wall Street Journal, April 23, 2002, p. A1; Tobias Buck, “Standard Bearer,” Financial Times, July 10, 2007, p. 8. Mitchener, “Standard Bearer: Increasingly.” European Commission President José Manuel Barroso interviewed by John Peterson July 17, 2007, hosted by EU-Consent: Constructing Europe Network, http://www.eu-consent.net/library/BARROSO-transcript.pdf. Jeremy Rant, “Transatlantic Regulatory Harmony Is in the Air,” Financial Times, September 25, 2007, p. 11. Schnabel, The Next Superpower? The Rise of Europe, p. 60. There are minimum sales and markets sharers, see Council of the European Union, Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri=CELEX:32004R0139:EN:NOT. Carol Matlack, “Why Brussels Is Abuzz with Lobbyists,” Business Week, October 29, 2007, http://www.businessweek.com/magazine/content/07_44/ b4056075.htm. Ibid. Harvey Black, “Chemical Reaction: The US Response to REACH” Environ Health Perspective 116, no. 3 (2008), pp. 124–127, http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=2265068. Waking up to REACH: Global companies weigh risks and rewards of Europe’s newest law on the safe use of chemicals, PricewatershouseCooper, 2008, http://w w w.pwc.com/en_GX /gx/chemicals/pdf/global-chem-surveyreach.pdf. Kadi v Council and Commission (2008) T-315/01 and Yusuf and Al Barakaat International Foundation v Council and Commission (2008) T-306/01 http:// eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62005J0402:EN: HTML. Council of the European Union, “Directive of the European Parliament and of the Council on Ship-Source Pollution and on the Introduction of Penalties for Infringements,” Official Journal of the European Union 255 (2005), p. 11, http://www.emsa.europa.eu/Docs/opr/directive_2005_35_ec.pdf.

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24. E.g., Zoe Casey, “ECJ Dismisses Challenge to Shipping Pollution Laws,” June 3, 2008 European Voice, http://www.europeanvoice.com/article/2008/06/0208/ ecj-dismisses-challenge-to-shipping-pollution-laws/61008.aspx. 25. Jess Pillegaard, “Squaring the EPA-circle: Will the EU’s Trade and Development Policies Ever Meet?” (Paper presented at the EUSA Conference in Montreal, 17–19, 2007); “Italy, France Fall behind on Africa Aid, Say Gates and Geldof,” CNN.com, June 12, 2009, http://www.cnn.com/2009/ WORLD/europe/ 06/12/geldof.gates.g8.aid/index.html. 26. Richard Youngs, Europe’s Flawed Approach to Arab Democracy (Brussels: Center for European Reform, 2009), http://www.cer.org.uk/pdf/essay_ youngs_arab_democracy.pdf. 27. The EU states vote as a group approximately 70 percent of the time EU Voting Behavior in the UN General Assembly, 1990–2002: The EU’s Europeanising Tendencies Helen Young and Nicholas Rees, Irish Studies in International Affairs, Vol. 16 (2005), pp. 193–207 at http://www.ria.ie/cgi-bin/ria/ papers/100542.pdf; Paul Luif “EU Cohesion in the UN General Assembly: A Quantitative Analysis with Special Regard to the Distance of the US from the EU Consensus,” (Paper presented at for the 49th Annual ISA Convention, San Francisco, CA, March 26–March 29, 2008). 28. Richard Gowan and Franziska Brantner, “A Global Force for Human Rights? An Audit of European Power at the UN,” European Council on Foreign Relations (2008) http://ecfr.3cdn.net/3a4f39da1b34463d16_tom6b928f.pdf. 29. David Dombey and Edward Luce, “Obama Camp Signals Intent to Tackle ‘crisis,’ ” Financial Times, July 2, 2008, p. 4. 30. It was truly totalitarian rather than Marxist-based Communism; a truly communal society would need no military force, secret police, and widespread corruption. While external pressure and the American military build-up hastened the demise of the Soviet Union and its Communist hold on eastern Europe, but it was not Reagan’s great oratory but the economic inefficiencies of a corrupt, bribery-laden Communist system, where huge parts of GDP went to pay party officials and regional officials to tow the party line, that played a primary role in its undoing. See e.g., Konstantin Simis M., USSR: The Corrupt Society (New York: Simon and Schuster, 1982); Ronald J. Hill, The Soviet Union: Politics, Economics and Society (Marxist Regimes) 2nd Ed (London, New York: Continuum International). 31. E.g., Tuomas Forsberg, and Graeme P. Herd, Divided West: European Security and the Transatlantic Relationship (New York, London: Blackwell, 2006) pp. 76–79. 32. Kagan, “Power and Weakness,” p. 3; Henry Kissinger quoted in Jan Zielonka, Explaining Euro-Paralysis: Why Europe Is Unable to Act in International Politics (London: Macmillan, 1998), p. 177; American General Norman Schwarzkopf quoted in Anja Dalgaard-Nielsen “Looking to Europe-American Perceptions of the Old World” Cooperation and Conflict 39, no.1 (2004), p. 70. 33. The wars in the Balkans generally threatened European’s physical security. Albania might have intervened, spurring insurgency warfare, with Russia then stepping up military support to Serbia, while other regions took a cue

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34. 35.

36.

37.

38.

39.

40. 41.

42.

43.

Notes from Kosovo to begin independence movements of their own. Louis Henkin, “Kosovo and the Law of Humanitarian Intervention,” American Journal of International Law 93, no.4 (1999), pp. 824–828; Christine Chinkin, “The Legality of NATO’s Action in the Former Republic of Yugoslavia (FRY) under International Law,” International and Comparative Law Quarterly 49, no.4 (2000), pp. 910–925. 1999 Cologne Presidency Report, Annexes. These paragraphs draws on Leif Johan Eliasson, “European Security and Defense Policy,” in Handbook of Military Administration, ed. Jeffery A. Weber and Leif Johan Eliasson (Bocan Raton, FL: Taylor and Francis CRC Press, 2007), pp. 316–360. Leif Johan Eliasson, “European Union Defense Integration and the Effects on Militarily Non-Allied Member States: The Cases of Finland and Sweden,” (PhD Diss., Syracuse University, 2005). Europeans also recognize that the United States will not abandon its European allies, NATO members or not, should an external attack of some sort occur that requires hardcore military force projection in response. An officer at EU’s military headquarters confirmed expectations that the military giant that rescued nations in Kuwait and Kosovo would do even more to help a European ally, should it ever be necessary. Ibid., p. 280. Britain and France have mostly C141 (54) and A200 (28). Britain also has 60 intra-theater C130 airlift planes (compared to the United States which has more than 400), and some EU states have leased similar planes from Ukraine. Several states, including Britain, France, Germany, and Italy, have guaranteed short-notice airlift capabilities using Antonov AN-124-100, C-141, and A200 model aircrafts, for all EU operations. The treaty, based on a 1998 Letter-of-Intent, is between are Germany, France, United Kingdom, Italy, Spain, and Sweden. They account for 98.5 percent of all EU defense industrial output. Framework Agreement between the French Republic, the Federal Republic of Germany, the Italian Republic, the Kingdom of Spain, the Kingdom of Sweden, and the United Kingdom of Great Britain and Northern Ireland concerning Measures to Facilitate the Restructuring and Operation of the European Defence Industry, Farnborough, July 27, 2000 published as UK Treaty Series 33 (2001), http://www.fco.gov.uk/resources/en/ pdf/pdf14/fco_ts33-01_frameworkagreement1. Council of the European Union, Declaration on Strengthening Capabilities (Brussels: December 11, 2008). The number of troops than can be deployed simultaneously at any time will stand at 30,000, with twice that for rotation. Francois Heisbourg, “Certain Ideas of Europe,” Economist, podcast, July 17, 2008; US Department of State, “Background Note: France” http://www.state.gov/r/pa/ei/bgn/3842.htm. Tim Radford, “Military Dominates UK Science, Says Report,” Guardian, January 20, 2005, http://www.guardian.co.uk/uk/2005/jan/20/highereducation. science. European Commission, Eurobarometer 70, December 2008, p. 12.

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44. John McCormick, The European Superpower (New York: Palgrave Macmillan, 2005), p. 66; Daniel Keohane, “The European Defense Plans: Filling the Transatlantic Gaps,” International Spectator 38, no. 3 (2003), pp. 34–42. 45. Annika Bjorkdahl and Maria Stromvik, EU Crisis Management Operations ESDP Bodies and Decision-Making Procedures (Copenhagen: Danish Institute for International Studies, Report 8, 2008). 46. Senator Jesse Helms, Protocols to the North Atlantic Treaty of 1949 on Accession of Poland, Hungary and the Czech Republic, Executive Calendar No. 16, 105th Cong., 4th sess. (April 27, 1998), S3604; Kim Holmes, “Outlook for the Transatlantic Alliance,” American Political Science Association European Politics and Society Newsletter (Spring/Summer, 2008), p. 14; Christopher Caldwell, “Europe Needs to Get Real,” Time Magazine, January 12, 2003, http://www. time.com/time/europe/magazine/2003/ 0120/cover/view_caldwell.html; College Survey 2009, 38 percent of respondents who said the Europeans are pacifist also said Europe refuses to use military power. 47. Britain, France, the Netherlands, and Italy offered troops and weapons for the invasion of Afghanistan, but this assistance was rejected by the Bush administration. Only British forces assisted with the initial attack, even as United Kingdom, Canada, Australia, France, New Zealand, Italy, and Germany offered logistical and other support. 48. “Americans and Europeans Differ Widely on Foreign Policy Issues Bush’s Ratings Improve But He’s Still Seen as Unilateralist,” April 17, 2002, Pew Research Center’s Global Attitudes Project. 49. James Graff, “Europe’s Family Feud President Jacques Chirac Puts Pressure on EU Candidate Countries to Toe the French Line on Iraq,” Tim, March 3, 2003, http://www.time.com/time/europe/magazine/2003/0303/war/story.html. 50. E.g., European Commission, Report on European Commission Intervention to Alleviate the Situation of Iraq’s Refugees and Internally Displaced Persons (Brussels: European Commission, September 2008), http://ec.europa.eu/ europeaid/where/gulf-region/documents/report_ec_intervention_iraq_ refugees_idps_09_2009.pdf. 51. “UK Armed Forces Below Strength,” BBC News UK, November 3, 2006, http://news.bbc.co.uk/2/hi/uk_news/politics/6111048.stm. 52. Anthony Dworkin, “Beyond the ‘War on Terror’: Towards a New Transatlantic Framework for Counterterrorism,” Policy Brief 13 (Brussels: European Council on Foreign Relations, May 2009), p. 3. 53. Tristana Moore, “Germany ups Terrorism Alert before Election,” Time, July 6, 2009, http://www.time.com/time/world/article/0,8599,1908622,00.html; Andre de Nesnera, “European Governments Place Restrictions on NATO Forces in Afghanistan,” Global Security.org, August 20, 2009, http://www. globalsecurity.org/military/library/news/2009/08/mil-090820-voa08.htm. 54. Council of the European Union, EU Police Mission in Afghanistan (Brussels: European Union, 2009), http://www.consilium.europa.eu/uedocs/cmsUpload/ 090708%20FACTSHEET%20EUPOL%20Afghanistan%20-%20 version%2015_EN.pdf.

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55. For an overview of current operations and further information, see Council of the European Union, “European Security and Defense Policy,” http://www. consilium.europa.eu/showPage.aspx?id=268&lang=EN. 56. The Center of Excellence of the US Department of Homeland Security at the University of Maryland, “Global Terrorism Database,” http://www.start. umd.edu/gtd; Center for Systemic Peace, “Conflict Trends,” Figure 18, http:// www.systemicpeace.org/CTfig18.htm. 57. Daniel Keohane, “The Absent Friend: EU Foreign Policy and counterTerrorism,” Journal of Common Market Studies 46, no. 1 (2008), p. 126. 58. Council of the European Union, “Political and Security Committee Decision Atalanta/6/2009,” Official Journal of the European Union 259 (2009), p. 68. http://www.consilium.europa.eu/showPage.aspx?id=1519&lang=EN. 59. Robert J. Lieber, “Transatlantic Relations after the Election,” American Political Science Association European Politics and Society Newsletter (Spring/ Summer, 2008) p. 5; “EU Anti-Terror Chief Defends Intelligence Work,” EUObserver, September 4, 2009, http://www.euobserver.com/24/28600. 60. E.g., the speech by David Miliband, “After Mumbai, Beyond the War on Terror,” delivered in Mumbai, India, January 15, 2009, http://www.davidmiliband.info/speeches/speeches_09_01a.htm; France Department of Defense, Prevailing against Terrorism White Paper on Domestic Security against Terrorism (Paris: 2006), pp. 123–124. 61. US State Department, “Background Notes France,” http://www.state.gov/r/ pa/ei/bgn/3842.htm; Moore, “Germany ups Terrorism Alert.” 62. Amnesty International USA, “European States Legally Responsible for Rendition Abuses, According to New Amnesty International Report,” press release, June 13, 2006, http://www.amnestyusa.org/document.php?id=EN GUSA20060613003&lang=e; UN Human Rights Council, Tenth Session, “Promotion and Protection of all Human Rights, Civil, Political, Economic, Social and Cultural Rights, including the right to Development, Report of the Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism,” prepared by Martin Scheinin, A/HRC/10/3, February 4, 2009, p. 19, http://www2.ohchr.org/ english/issues/ terrorism/rapporteur/docs/A.HRC.10.3.pdf; Richard NortonTaylor and Nicholas Watt, “MEPs Condemn Britain’s Role in ‘Torture Flights,’ ” Guardian, November 29, 2006, http://www.guardian.co.uk/ politics/2006/nov/29/usa.eu. 63. Philip H. Gordon, Assistant Secretary, Bureau of European and Eurasian Affairs, Subcommittee on Europe of the House Foreign Affairs Committee, Strengthening the Transatlantic Alliance: An Overview of the Obama Administration’s Policies in Europe, 111th Cong., 1st sess., June 16, 2009, http://www.internationalrelations.house.gov/111/gor061609.pdf. 64. Anthony Dworkin, Beyond the ‘War on Terror’: Towards a New Transatlantic Framework for Counterterrorism (Brussels: European Council on Foreign Relations, Policy Brief 13, 2009), p. 5. 65. European Commission, Eurobarometer 66, Summer 2006, p. 68, http:// ec.europa.eu/public_opinion/archives/eb/eb66/eb66_highlights_en.pdf.

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66. For a critical analysis of the EU’s contributions see Charles Grant, The EU’s Fleeting Chance for Global Leadership (Brussels: Center for European Reform, no. 63, December 2008/January 2009), http://www.cer.org.uk/articles/63_ grant.html; For a positive assessment and analyses see Jolyon Howorth, Security and Defense Policy in the European Union (New York: Palgrave Macmillan, 2007).

8 Kant and Uncle Sam: Competition, Coordination, and Cooperation 1. Patrick. J. O’Rourke, “Among the Euro-Weenies,” Rolling Stones Magazine, May 1986, quoted in The Economist, “A Special Report on the Euro Area; Holding Together,” June 11, 2009, p. 1. 2. Mixim Pei, “Bamboozle! Don’t Believe the Asia Hype” Foreign Policy, July/ August (2009), pp. 32–36; Jamil Anderlini, “A Cautionary Tale from China,” Financial Times, July 28, 2009, p. 8; Tony Barber, Martin Arnold, and Bertrand Benoit, “Sweden Defends Private Equity,” Financial Times, July 2, 2009, p. 2; Ralph Atkins and Daniel Pimlott, “Lending Fears Dent Recovery Prospects,” Financial Times, August 28, 2009, p. 2. 3. Transatlantic Economic Council, http://www.eurunion.org/partner/euusrelations/ TEC.htm; Council of the European Union, European Council Summit Declaration (Brdo, Slovenia, June 10, 2008), p. 16, http://www.eurunion.org/ partner/summit/Summit2008-06-10/2008EU-USSummitDeclar-6-10-08. pdf#page=16. 4. E.g., Peter Baldwin, The Narcissism of Minor Differences: How America and Europe Are Alike (New York: Oxford University Press, 2009). 5. E.g., US Department of Education, National Center for Education Statistics, Highlights from PISA 2006: Performance of US 15-Year-Old Students in Science and Mathematics Literacy in an International Context (2007), http://nces. ed.gov/pubs2008/2008016_1.pdf. 6. Bruno Lanvin and Pamela S. Passman, E-Skills, Competitiveness and Employability Knowledge Societies’ Next Frontier (Paris: Insead, September 2008), http://www.insead.edu/facultyresearch/centres/elab/research/eskills.cfm. 7. European Commission, “Bilateral Trade Relations: USA,” http://trade. ec.europa.eu/doclib/docs/2006/september/tradoc_113465.pdf. 8. Several OECD officials interviewed in Chris Giles, “There Are Wounds and There Is Scar Tissue,” Financial Times, June 25, 2009, p. 4; Michael Mackenzie and Gillian Tett, “Moody’s warns on US ratings,” Financial Times, February 4, 2010, p.17. 9. According to Justice Department data of federal convictions, there have been 20,000 public officials and private citizens convicted of public corruption over the past two decades. US Department of Justice, “Report to the Congress

212

10.

11.

12. 13.

14.

15.

16.

17.

18. 19. 20. 21. 22.

Notes on the Activities and Operations of the public Integrity Section,” 2006, pp. 48–55, http://www.usdoj.gov/criminal/pin/docs/arpt-2006.pdf; “The Blagojevich Factor? 5 Most Corrupt US States” US News and World Report, December 11, 2008, http://www.usnews.com/articles/opinion/2008/12/11/ the-blagojevich-factor-5-most-corrupt-us-states.html. European Commission, EU Focus, Shared Values and Objectives (The Delegation of the European Commission to the United States, 2008), p. 4, http.www://eurunion.org. Y. Devuyst, “Transatlantic Competition Relations,” in Transatlantic Governance in the Global Economy, ed. M. Pollack and G. Shaffer (Oxford: Rowman and Littlefield, 2001), p. 127. Joanna Chung, “Regulators in Drive to Curb Corruption,” Financial Times, July 27, 2009, p. 2. E.g., P. Gottschalk and T. M. Smeeding, “Empirical Evidence on Income Inequality in Industrialized Countries,” in Handbook of Income Distribution, Vol. 1, ed. A. B. Atkinson and F. Bourguignon (Amsterdam: Elsevier, 2000), chap. 5. P. Conceicao, P. Ferreira, and J. K. Galbraith, “Inequality and Unemployment in Europe: The American Cure,” UTIP Working Paper Number 11 (Austin:, LBJ School of Public Affairs The University of Texas at Austin, Texas, May 18, 1999), pp. 3–5, http://papers.ssrn.com/sol3/papers.cfm?abstract_ id=228689. Peter Baldwin, “Sophisticated Europeans, Obese Americans?” Spiegel Online, June 6, 2009, slide 8, http://www.spiegel.de/fotostrecke/fotostrecke-43061–8. html#backToArticle=628381. Although including combined expenditures provide a better representation, it must be emphasized that many private initiatives fail to reach people in rural areas, and most importantly, tend to decline in times of increased need, such as recessions, when European programs increase. Private spending includes those that are required or strongly encouraged. OECD, Society at a Glance, OCED Social Indicators (Paris: OCED, 2005), p. 63. The German Marshalls Fund of the United Sates, “Transatlantic Trends 2008,” news release, 2008, http://www.transatlantictrends.org/trends/index. cfm?id=184. Sylvia Pfeifer, “The Art of Predicting Wars,” Financial Times, June 15, 2009, Aerospace section, p. 3; Demetri Sevastopulo, “US Cost Cuts under Fire,” Financial Times, June 15, 2009, Aerospace section, p. 3. John McCormick, The European Super Power (New York: Palgrave Macmillan, 2005), pp. 67–68, 81. Jack Goldsmith, “The Global Convergence on Terror,” Financial Times, August 1, 2007, p. 8. Ibid. Robert Kagan, Of Paradise and Power: America and Europe in the New World Order (Danvers, MA: Knopf, 2003), p. 5. Joscka Fisher, “Between Kosovo and Iraq: The Process of Redefining the Transatlantic Relationship,” German Historical Institute Bulletin, no. 41 (2007), pp. 9–19.

Notes

213

23. John Thornhill, “Income Inequality Seen as the Great Divide,” Financial Times, May 19, 2008, p. 5. 24. “Transatlantic Trends 2008.” 25. Pei, “Bamboozle! Don’t Believe the Asia Hype”; Martin Wolf, “Wheel of Fortune Turns as China Outdoes West,” Financial Times, September 14, 2009, p. 4. 26. See e.g., Fareed Zakaria, “The Future of American Power” Foreign Affairs, May/June 87, no. 3 (2008), pp. 18–43. 27. E.g., Director of the Policy Planning Unit, Ann-Marie Slaughter, Assistant Secretary of State for Europe and Eurasian Affairs, Philip Gordon. 28. Steve McGuire and Michael Smith, The European Union and the United States Competition and Convergence in the Global Arena (New York: Palgrave Macmillan, 2008), p. 134. 29. Rockwell A. Schnabel, The Next Superpower? The Rise of Europe and Its Challenge to the United States (Maryland: Rowman and Littlefield, 2005). 30. The German Marshall Fun in the United States, “Transatlantic Trends 2009,” news release, September 10, 2009, http://www.transatlantictrends. org/trends/.

Appendix B Survey of American Students’ Views and Ideas of Europe 1. For more information contact Dr. Shala Davis, [email protected], (570)422-3336, or Dr. Eliasson at [email protected].


Index

Abizaid, John, 151 Abortion, 95, 96 Afghanistan, 9, 15, 130, 131, 133, 134–135, 136, 138 Airbus, 42, 122 American Dream, 116–117 Anglo-Saxon model, 36, 75, 77, 154 al-Qaeda, 109, 134, 137 asylum, 31 process, 98–99, 105, 125 seekers, 97–98, 101 Austria, 32, 37, 48, 54, 69, 77, 79, 89, 97, 103, 114, 130, 149 Balkans, 15, 27 Beck, Glenn, 1, 11, 93, 112 Belgium, 28, 32, 48–49, 51–52, 56, 59, 75–77, 79, 81, 89–91, 94, 97, 107, 112 Blair, Tony, 14, 28, 102, 129, 142 Brazil, 7, 16, 45 Britain, 1, 5, 18, 31, 33, 37, 38, 40, 46, 48–53, 50, 55–56, 58, 61, 66, 70, 75–77, 79–81, 82–83, 142, 146, 148, 149 health, 85, 89–90, 93 immigrants, 97, 99, 102–106, 150 military forces, 129–134, 136 and the U.S., 13, 14, 42–43, 59 Brooks, Arthur, 11, 115 Brown, Gordon, 14 Brussels, 29, 58, 98, 117, 120, 125, 129–130

Bulgaria, 40, 54, 56, 75, 80, 103, 105, 108, 133, 147 Bush, George W., 28, 79, 133–134, 155 California, 4, 27, 123, 146 Capitalism, 5, 19, 35–37, 50, 59, 74, 82–84, 127, 144–145, 154 carbon emissions, 67, 69–70, 124, 148 Catholicism, 94–96, 150 China, 1, 7, 10, 14, 37, 67, 69, 147, 159 and EU, 15, 19, 41, 120, 123, 143, 154, 156 growth, 6, 16–17, 46–47, 71, 154 and U.S., 15, 41, 45, 120, 123, 143, 156 Christianity, 6, 38, 56, 95–96, 98, 150 Colbert, Stephen, 141, 164 cold war, 13, 36, 137 competition (incl. policy), 16–17, 20, 28, 30, 37–38, 40, 44, 47, 49, 51, 58, 62, 71, 81, 91–92, 112, 115, 123–124, 143–145, 155 conservatism, 5, 9, 11, 151 corruption, 40, 48, 99, 107–108, 147 Cyprus, 57, 76, 78, 99, 114 Czech Republic, 33, 38, 40, 44, 48, 54, 56, 57, 59, 65, 75, 80, 83, 93, 105, 113, 114, 122, 128, 130, 133, 150, 155 debt American, 18, 45–46, 56, 146, 154 European, 18, 40, 45–46, 56, 108, 115, 142, 146–147

216

Index

demographic trends, 80, 95–96, 106, 147, 154, 156 Denmark, 31, 37, 41–42, 45, 48–49, 51, 53, 56–57, 62, 65, 69, 71, 75, 77, 79, 89, 98–99, 104, 107, 109, 113–116, 133, 148 education, 16, 30–32, 47, 57, 62, 65, 107, 112, 126, 144 costs, 30, 39, 74, 78, 81–84, 114, 149 levels, 44, 50–51, 74, 81–84 employment, 45, 51–53, 68 hours, 40, 49, 52–54 laws, 46, 51–53, 61, 77–78 rates, 51–53, 59, 75, 97, 100–103, 149–150 energy, 112 policy, 42, 44, 67, 69, 154 renewable, 67–68, 70–71, 159 environmental policy, 30, 42, 66–67, 69–71, 121, 125, 148, 153 Estonia, 30, 37, 40, 44, 48, 56–57, 64, 91, 95, 133, 142, 148 euro, 2, 31, 40 advantages of, 40, 42, 45, 55 compared to the dollar, 45, 54, 96 European Aeronautic Defense and Space company (EADS), 43 European Central Bank, 18, 31, 44, 45, 128 European Commission, 30 overseeing treaties, 30, 65, 67, 71, 137 regulating companies, 30–31, 61, 71, 123–125 European Council, 29, 31, 67 European public opinion, 88 on immigrants, 96, 99, 101–103, 105–106 on religion, 88 on the role of government, 36, 38, 57–58, 74, 77, 80–85, 138, 141 on trade, 121–122 on use of force, 120, 127, 134, 136 on work, 10, 52, 57

European Security Strategy, 110, 129 European Union as an ally to the United States, 5–6, 15, 19, 21–23, 138, 143, 154–155 and aid, 2, 11, 30, 117, 120–21, 126–27, 135, 141 Court of Justice, 30, 52, 79, 90, 104, 112, 116, 125 defense policy, 30–31, 124, 128–132, 138–139, 151, 153 development aid policy, 120, 126–127, 137, 152, 154 as an economic power, 28, 40–45, 119–139, see also trade, aid as a free trade zone, 25, 28–29 identity, 32–33, 84, 113 as an international actor, 120–125 law, 25, 30–31, 43, 49, 104, 112, 123, 125, 138, 143 membership, 28, 59, 127–128 and promotion of democracy, 7, 112, 120, 126–127, 136, 154 and trade, 14–15, 15–27, 17, 25, 28, 30, 31, 40, 44, 47, 48, 74, 95, 119, 121–23, 143, 152, 153–55. Federal Reserve (United States), 18, 31, 45 Finland, 30, 33, 38, 41, 42, 43, 46, 48, 57, 59, 62, 63, 65, 69, 70, 78, 81, 85, 86, 99, 107, 113, 121, 130, 142, 145, 148, 149, 150 France, 1, 5, 13–14, 19, 28–29, 37–38, 40–41, 45, 46, 48, 50–51, 53, 54, 55, 56, 57, 59, 61, 64–66, 70, 74–76, 78–79, 80, 82–84, 86, 96–97, 103–105, 107, 110–111, 116, 122, 126–127, 142, 149 Healthcare, 38, 89, 91 military forces, 43, 129–131, 133, 136 Gates, Robert, 49 Germany, 9, 37, 45, 62, 64, 78, 82, 94–95, 100, 104–105, 117, 123

Index exports, 50–51, 53 healthcare, 89–91, 94 military forces, 130, 134, 136–137 technology/industry, 41–42, 47, 62, 67–68, 71, 89 Greece, 44, 45, 48, 51, 52, 65, 69, 76, 82, 95, 116 debt, 59, 142, 146–147 Gross Domestic Product (GDP) in Europe, 15, 46, 145 in the United States, 15, 46, 146 Hannity, Sean, 12, 93 healthcare, 84–90 costs, 86–89 in Europe, 86 in United States, 85–87, 90 see also individual countries Hungary, 38, 40, 44, 48–49, 57–58, 75, 78–79, 91, 103, 107, 128, 145 immigration illegal, 22, 99, 112, 148 legal, 2, 31, 58, 80, 96–98, 100–106, 112, 115, 148–150 income, 11, 112, 126 in Europe, 1, 33, 39–40, 54–55, 57–58, 74, 77, 80–81, 84, 117 in the United States, 11, 33, 54–55, 80, 117, 149 see also taxes Insead, 40, 44 investments in education, 16, 47, 82–83 foreign direct, 14–15, 17, 19, 41–42, 49–50, 59, 127, 146, 151, 153–154 Iraq, 15, 42, 97, 101, 109, 131, 133, 134, 136–137, 153 Ireland, 13, 18, 41, 45, 47–48, 50, 65, 75, 77, 78, 79, 81–82, 89, 94–95, 104, 107, 109, 113, 142, 146 Islam (Muslims), 39, 95, 98, 100, 102–103, 109, 129, 137, 150, 154

217

Italy, 1, 5, 13, 28, 33, 37, 43, 48, 51–53, 64, 65, 66, 70–71, 77–78, 79, 80, 83, 89, 95, 99, 105, 107, 110, 131, 136 corruption, 99, 108–109, 147 debt, 45, 59, 126, 142, 146 Kagan, Robert, 119, 153 Kosovo, 4, 15, 26, 120, 129, 135 Kyoto Protocol, 66, 67, 121 Labor parties, 6, 36, 37, 38, 142 Latvia, 30, 37, 52, 80, 133 debt, 59, 83, 128, 146 liberalism American version, 5, 9, 11, 22, 37 classical, 5, 13, 20, 22, 36, 37, 50, 73, 106, 150, 151 Liberal parties, 5, 37 life expectancy, 1, 79, 86, 87 Limbaugh, Rush, 11, 12, 143 Lisbon Agenda, 44, 51, 52 Lithuania, 40, 57, 70, 133 Luxembourg, 28, 48, 57, 89, 147 Malta, 76, 95, 99 Maryland, 33 maternity leave, 40, 76 McCormick, John, 133, 139 media, 2, 11, 17, 19, 20, 32, 37, 56, 93, 113, 133, 121, 152 Merkel, Angela, 18 misperceptions, 1, 2, 7, 20, 21, 22, 27, 84, 106, 117, 156 definition, 10–12 Mississippi, 33, 80, 95 myths, 1, 2, 7, 21, 22, 35, 41, 84, 156 definition, 11–12 Netherlands, 28, 32, 37, 40, 41, 48, 49, 50, 52, 53, 56, 65, 74–75, 76, 77, 78, 81, 86, 89, 92, 94, 95, 97–98, 104, 107, 113, 126, 149 New Jersey, 146, 147

218

Index

New York city, 29, 49, 58, 85, 98, 100, 117, 133, 155 state, 9, 13, 30, 146 Norway, 25, 32, 41, 48, 65, 75, 76, 148 Obama, Barrack, 14, 88, 122, 123, 155 Olberman, Keith, 11 patents, 63, 65, 148 Pennsylvania, 20, 30, 41, 89 Poland, 29, 31, 33, 37, 38, 40, 46, 48, 52, 55, 56, 58, 59, 63, 66, 70, 75, 78, 79, 80, 81, 83, 86, 89, 95, 96, 103, 105, 113, 120, 128, 130, 133, 136, 155 Portugal, 26, 30, 32, 33, 42, 44, 45, 46, 49, 57, 59, 69, 76, 77, 79, 80, 95, 107, 127, 146 power, 14, 17, 74, 102, 111, 120–121, 139, 142 American, 7, 10, 119, 139, 151, 156 definition, 9, 120, 153 European, 51, 117, 131, 154, see also European Union renewable, see energy soft, 120–121, 124, 125, 126–127, 139, 153 private enterprise (incl. entrepreneurship), 9, 12, 36, 48, 49–50, 63, 69, 74, 83, 92 purchasing power, 54–55, 88, 146 racism, 101–103, 106, 150 research and development, 19, 39, 50, 61–63, 96, 131, 132, 142, 146 retirement benefits, 79, 116 policies, 52–53, 79, 92, 116 Romania, 41, 43, 54, 56, 57, 70, 79, 80, 95, 103, 108, 116, 133, 155

Sarkozy, Nicholas, 43, 102, 131 Slovakia, 40, 41, 47, 56, 57, 66, 70, 75, 79, 80, 83, 103, 105, 116, 122, 133 Slovenia, 30, 33, 38, 40, 44, 46, 48, 54, 58, 59, 63, 89, 133, 142 small businesses, 12, 19, 22, 48, 49–50, 94, 106, 146 Smith, Lamar, 19 social assistance programs, 18, 75–76, 78, 80, 95, 104, 148, 154 Social Democratic parties, 5, 36, 43, 82 social models, 44, 74, 141 Spain, 5, 29, 32, 33, 37, 45, 48, 49, 51, 52, 56, 59, 61, 69, 70, 75, 77, 80, 82, 83, 85, 89, 94, 95, 99, 103, 104, 107, 109–110, 111, 116, 122, 127, 131, 136, 149 Stewart, Jon, 39 Sweden, 32, 37, 38, 39, 41, 43, 46, 48, 51, 52, 53, 55, 56, 57, 59, 63, 64, 65, 66, 67–68, 69, 70, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 86, 89, 90, 91, 95, 96, 97, 99–105, 107, 110, 113, 114, 122, 131, 136, 142, 148, 149, 150 Switzerland, 25, 32, 37, 40, 40, 57, 63, 65, 66, 85, 90, 92, 107, 116, 147 tariffs, 20, 21, 25, 28, 123 taxes, 28, 31, 51, 68, 73, 83, 143–144 capital gains, 56, 57, 58, 109 corporate, 7, 12, 38, 45, 46, 47, 53, 59, 61, 64, 91, 145, 154, 161 exemptions, 45, 56, 57, 149 income, 4, 7, 13, 17, 25, 29, 31, 39, 40, 46, 47, 53, 54, 55–57, 58, 74, 88, 94, 141, 147, 149 value added, 58 terrorism

Index attacks, 109–110, 119–120, 136 fighting it, 7, 100, 103, 104, 109–111, 113, 120, 124–125, 126, 133, 136–138, 151–152, 153 Texas, 4, 19, 124 trade disputes, 17, 21, 71, 122–123, 154 policy, 6, 16, 17, 21, 25, 28, 30, 31, 38, 121, 122, 127, 128, 143, 151, 154

219 volume, 14, 15, 16, 40, 47, 121, 123, 125, 151, 153 transfer payments, 55, 75–76, 83, 89, 113, 148 see also social assistance programs

unemployment compensation, 53, 55, 75, 77–78, 145 United Kingdom, see Britain World War II, 7, 10, 13, 14, 27, 32, 36, 74, 121

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