NON-PARTICIPANTS:

Yet Another Reason They Dislike Us: Europe is rich, but the United States is richer. (Russell A. Berman and Arno Tausch, Winter 2005, Hoover Digest)

In 2000 the European Union initiated its so-called Lisbon Process, with the stated goal of becoming “the most competitive and dynamic, knowledge-based economy in the world, capable of sustainable economic growth, creating more and better jobs and greater social cohesion” by the year 2010. To aspire to a more dynamic economy is hardly controversial, but the Lisbon Process was also, in effect, a unilateral declaration of competition with the United States. The race between the euro and the dollar on world currency markets added to the sense of competition between two systems that had once been considered part of an integrated “Atlantic West” in the not-so-distant years of the Cold War.

The tension between Europe and the United States has been accompanied by a rising chorus of generalized anti-Americanism in European streets, largely with the pretext of the war in Iraq but in fact based in deeper structures independent of the war. This anti-Americanism grew precisely in the years in which the newly launched Lisbon Process turned into a failure. In terms of economic productivity, job growth, and other factors, both “Old Europe” (the Western European member states before enlargement, or “EU-15”) and “New Europe” (the “EU-25,” including 8 former communist states along with Cyprus and Malta) are far from becoming “the most competitive and dynamic . . . economy in the world.” When one thinks of Europe today, the word dynamic does not come quickly to mind.

By and large, Europe has not participated in the world economic expansion of 2004, especially relative to the spectacular growth in China and the growth in the United States (aided by the recent tax cuts). GDP growth in the EU-15 in 2003 was a very sluggish 0.8 percent, followed in 2004 by an unimpressive 2.3 percent. More important, however, is the long-term perspective: Europe has simply failed to reduce the productivity gap with the United States. Political rhetoric notwithstanding, Europe was never a genuine competitor, let alone a threat to U.S. economic predominance in the global economy, and Europe continues to lag behind the United States after the initiation of the Lisbon Process just as much as it did before. Since 1995, differences in economic growth have grown wider in every year except 2001.

This difference in economic performance translates into a big difference in income. When we try to understand the bitterness with which some Europeans have come to view the United States, it would be foolish to ignore this factor. How big is the difference? Consider the latest data only for Old Europe (the wealthier Western European countries) and leave aside the much poorer New Europe still recovering from the devastation of communist policies and the difficult transitions to market economies. Even with this handicap built in, European real purchasing power is quite sorry. Between 1995 and 2004, European per capita income ranged between 70.1 and 73.7 percent of U.S. real income. With that in mind, anti-Americanism begins to look very much like basic human greed and envy.

Feeding the vicious cycle are both the demographic implosion and the artificially high interest rates they've sported since the run up to Iraq began--a futile attempt to show their currency matters even if they don't.

Posted by Orrin Judd at March 5, 2005 6:54 AM