WHAT FUTURE?:

The Foundering Continent: a review of The Future of Europe by Alberto Alesina and Francesco Giavazzi (CLAIRE BERLINSKI, March 28, 2007, NY Sun)

It takes on average 62 working days, 16 separate documents, and the equivalent of $5,000 to acquire the permits to open a business in Italy. In France, it takes 53 days, 15 documents, and $4,000. In America, it takes a mere four days, four documents, and $166. In "The Future of Europe" (MIT Press, 172 pages, $24.95), economists Alberto Alesina and Francesco Giavazzi provide a wealth of such examples to buttress their argument that Europe is on a state-subsidized train to economic and political irrelevance, but as anyone who has tried to do business in Europe knows, those statistics alone are all you really need.

The 50th anniversary of the Treaty of Rome, the founding document of the European Economic Community, has occasioned festivities across the Continent -- free beer and sausages on the streets of Berlin, a gala performance in Brussels by the stars of the Eurovision Song Contest, state-subsidized raves -- accompanied by a great deal of self-congratulation. The editors of Newsweek's international edition have declared this Europe's "Golden Moment." Europe, they write, is now "a global superpower of world-historical importance, second to none in economic clout ... its values are spreading across the globe -- far more attractive, in many respects, than those of America." As for the gloomy pundits who keep insisting that Europe is in terminal decline, well, if only they would visit Europe, they would see this is "wrong, even absurd," and if anything, "Europe's trajectory is up, not down."

Messrs. Alesina and Giavazzi have not only visited Europe but are, in fact, Europeans, albeit Europeans who, like many of their most talented contemporaries, have taken up residence in America. Mr. Alesina is a professor of political economics at Harvard University, where, he notes, Europeans who have fled their countries' moribund universities comprise about a third of the economics department. Mr. Giavazzi is a visiting professor at the Massachusetts Institute of Technology. They are not persuaded by the vision of Europe's trajectory as an infinitely ascending golden ladder. The extended postwar period of European economic growth is over, they argue, and barring "serious, deep and comprehensive reforms," Europe will "inexorably decline, both economically and politically."

Disputing the oft-asserted claim that Europeans work less than Americans because they have perfected the art of living, Messrs. Alesina and Giavazzi contend that European idleness is the predictable result of stultifying labor market regulations, high taxation, and the excessive power of Europe's labor unions.

We've friends in the Dartmouth Econ Department who've published with him, so some bias, but Mr. Alesina seems to write more interesting economics pieces than the rest of his profession combined.

Posted by Orrin Judd at March 28, 2007 5:34 AM