A TRIP TO THE 70s:

Europe needs to be reminded of economic truths (BILL JAMIESON, 2/06/05, Scotland on Sunday)

FOR all the problems he has had with the US economy, Alan Greenspan, chairman of the Federal Reserve, can be excused from wondering if his watch stopped when he crossed the Atlantic.

He has been used to an American economy growing at 4%-plus. By contrast, the eurozone struggles to make even 2%. Given this backdrop to his keenly awaited Adam Smith lecture at St Bryce Kirk, Kirkcaldy, this afternoon, it will be tempting for Greenspan to remind us of some great truths derived from The Wealth of Nations. These are that free trade, liberal markets and the rule of law are better guarantors of wealth and progress than any amount of government aid packages and debt write-off schemes proposed at this weekend’s G7 summit.

Indeed, one country’s growth can greatly benefit another - and without growth in global trade, developing countries suffer, as do those that provide the vital commodities and raw materials: foodstuffs, oil, coal, copper, platinum and gold.

Europe may claim to have the superior ‘social’ model to America. But how superior is it really? Last week Germany announced truly shocking unemployment figures. Yes, they owe much to a change in the method of counting; and yes, the EU’s next ‘big project’ is growing jobs.

But that next big project has emerged covered in the dust of the previous one - the Lisbon Agenda ambition to make the EU economy the most competitive in the world by 2010. Barely five years into this agenda, by political decree, it has collapsed in utter failure.

So superior it's inferior.

Posted by Orrin Judd at February 13, 2005 6:17 AM