So I expect that the European critics, the U.N. (its money, its headquarters, its muscle, and its elite support, after all, depend on Americans), and most of the Arab world will eventually gravitate to the United States. After petty squabbles over prestige and honor, they will hold their noses and “support” (nodding, but no money) what is going on in Iraq — as long as we stay firm and don’t weaken in our commitment to rebuild Iraq and continue to press on in our effort to shut down the nearby havens of terror. There is no “war against terror,” remember — only a “war against those states that aid and abet those who employ the method of terror.”
Conventional wisdom here and abroad assures that Americans must seek to reclaim friendships now recklessly endangered. Yet despite the undeniable need for the United States to be humble and forgiving, I reckon the real rub may lie in the opposite direction, as they seek us out rather than vice versa.
These are all symptoms of a painful disease, a continental depression born of the realization that EU prosperity is a house built upon sand. While the American economy is picking up, the EU’s remains in stagnation, bordering on recession. The 35-hour workweek is splendid, provided you have a job. But what of the growing millions who are out of work and whose social security payments are now threatened with reduction or cut-off dates? Unemployment, already high, is rising in France and Germany.
In virtually every industry there are plans to shrink the work force. People have become too expensive, especially in France and Germany, where social security payments cost an employer almost as much as wages. In a desperate attempt to get its economy moving, France is set to cut income taxes, though this will raise its deficit to a level strictly forbidden by the rules governing the common European currency (the euro). France thus risks having enormous fines levied against it or, more likely, a collapse in confidence in the euro.
The truth is that the EU has been living beyond its means, and its bills are coming due. The biggest bill of all–the cost of generous state pensions, which in most EU countries are underfunded–is looming. It’s true that most advanced countries are having difficulties meeting pensions because people are living longer and work forces are expanding more slowly (or not at all). Britain is running into a pension crisis. Most of those who banked on a healthy private pension for their old age are going to be disappointed, partly because returns on investments are so low and partly because the Labour finance minister, Gordon Brown, has been raiding the till by abolishing tax-free pension dividends. This is the issue that will lose Tony Blair the next election, as the pain of Labour’s “pension raid” is felt. But at least Britain has a properly funded public pension plan. And the British economy is moving forward, perhaps not as fast as America’s, but at a healthy and accelerating rate.
The omens for continental Europe, however, are sinister. The entire plan for perpetual improvement upon which the EU depends is based on continuous economic expansion. There is no provision for stagnation. As we see in Japan, once stagnation sets in, it can last many years. Americans should count their blessings, above all the supreme blessing of having an economy that is run by businessmen not bureaucrats, or that–under wise governance–runs itself.