"Catch up with and take over America"

While Europe chastises America's parsimony and failure to embrace their global vision, fissures appear in the EU facade:

• European social model must be modernised, says Barroso - For Europe's Social Model to survive, the EU has to become economically more dynamic, European Commission President José Manuel Durão Barroso has said.

  "Without growth, without job creation, without more dynamism in our economies we cannot maintain the high levels of social insurance, protection and environmental protection which ... we call the European model", Mr Barroso told MEPs

• European Commission debates political message - The European Commission is at odds about what its main political message should be for the next five years.

  At its weekly meeting on Thursday (9 December), where its strategic programme was discussed for the first time, Commissioners were divided between two themes.

  Günter Verheugen, the powerful industry Commissioner, wants to push the message of ‘cutting red tape’ for businesses and emphasising competition.

  He was opposed by the Communications Commissioner, Margot Wallström. She argued that the message should be something that means something to EU citizens.

  According to an EU diplomat, she pushed for a more general theme of "solidarity, security and prosperity" to be the Commission's over-riding theme for the coming years.

• German interior minister calls for 'European Islam' - In Europe's largest member state, a strong debate is taking place about the integration of Muslims and Islam into society.

  German interior minister Otto Schily told this week's edition of news magazine Der Spiegel that his long-term goal is that Muslims in Germany accept a 'European Islam' - which respects the vales of Enlightenment and stands up for the rights of women.

  An intellectual-political examination of Islam is part of a programme that he wants to press ahead with for the integration of immigrants, Mr Schily told the magazine.

  He said that the Germany's regions should be more rigorous about the possibility of deportation when integration efforts fail.

• Results on Eurostat affair within months, says anti-fraud report - The number of cases reported to the European anti-fraud office has gone up by nine percent, according to this year's annual report due to be published on Friday.

  The European Parliament and Council have two active investigations each.

  -Development aid corruption
  One problem area that the report highlights is in the area of development aid.

  The report refers to "the complex and well-organised nature of financial fraud in humanitarian and development EU aid to third countries".

  "Such fraud takes advantage of the lack of coordination in monitoring and auditing activities between the various international donors".

  The report cites one case it opened, concerning a dam in Lesotho, which was to provide water to neighbouring South Africa. A bank account in Switzerland contains over 3 million euro in suspected bribes for a Lesotho official - over the years more than 180 million euro had been pumped into the project.

  -Eurostat
  Referring to Eurostat, one of OLAF's most high-profile cases which came to light last year and involved millions of euro being siphoned into private bank accounts, the director of OLAF said he expects "visible results within months".

• Minimum wage rates rising in Europe--Statutory minimum wage rates in Europe have risen significantly, exceeding the level of annual price inflation in most countries, a new study has found.

Europeans are beginning to realize there is

No such thing as a free lunch By Guoda Steponaviciene

EUOBSERVER/COMMENT - The recent report of the High Level Group on the Lisbon strategy has given new impulse to the debates on this broad and controversial issue. As the report says, the Lisbon strategy is about everything and about nothing.

But the group also stated, however, that the "Lisbon’s direction is right and imperative" and saw only one problem - that much more urgency was needed in its implementation.

The report, fraught with slogans and calls to act, resembles an advertising campaign rather than evaluation and prompts the following questions - what is the Lisbon strategy needed for and what should be done to attain its goals (if we agree that the goals are growth and employment).

Dovetailing the incompatible
So, why do we need the Lisbon agenda? The first answer is because we have to be the best in the world, or at least be better than the US. For Eastern European people, this recalls the famous Soviet slogan, "Catch up with and take over America." No wonder for some people, it leaves a bad taste in the mouth.

But do people actually care about being number one in the world or do they care about better living? It seems more reasonable to be concerned about one’s own well-being rather than measuring yourself against others. I believe that Europeans are less interested in being better off than the American people and more concerned with simply living well. What living well means is another, not easy question...cont'd below

...Another reason for the Lisbon agenda, stated in the report is that we need it "in order to sustain Europe’s social model." The essence of this model, we should remember, is not changing much or, more specifically, not taking away any of the existing social guarantees and benefits. Protests against attempts to reform labour markets and health care systems in Germany and other European countries demonstrate this very well.

How then can we expect the agenda for "growth and employment" to be implemented? This is the really tricky question: most people in the old European countries would like to preserve the current level of social welfare and even to increase it.

And the painful truth is that in order to enjoy real welfare, at least some part of the present benefits should be sacrificed. It is logical to say that to increase productivity, people have to work better and they should have the opportunities to do this.

Structural reforms, please
Education and social security are also key areas which Europe needs to consider carefully in its Lisbon strategy.

Sadly, not a single, specific measure has been proposed for structural changes in education systems. It would be naïve to believe there is no need for reform. Even if we are not making Europe a "copycat" of the US, we should bear in mind that most European countries have no private universities, while in the US even state-owned universities offer their services as market players.

The same is with health care and social security reforms. The report states, "Already from 2020, projected spending on pension (with current level of benefits) and health care will increase by some 2% of GDP in many member states and in 2030 the increase will amount to 4-5% GDP."

These forecasts are serious and almost certain to come true as a natural result of the pay-as-you-go pension systems and government financed health care schemes.

However, again, not a single hint at how to crack this problem can be spotted in the report, except an invitation to multiply the number of immigrants who would kindly earn the tax money to cover the proliferating costs of the European way.

Knowledge economy overrated
The report contains a huge chapter on the knowledge economy. This is natural as this topic is wide and complicated.

But bearing in mind that other crucial issues of growth and productivity - CAP, a more open external trade or a replacement of regulations with market instruments – have not been mentioned at all, the significance given to the knowledge economy seems slightly overblown.

The key ideas of the knowledge economy, underlined in the report, are to make R&D a top priority and to develop the high-tech industry. We are far from sure such priorites are justified.

Most analysts agree that the bottleneck of productivity growth is not in knowledge creation (R&D), and, especially, not in the sums spent, but in the application of knowledge (innovation).

The fact that Europe produces nearly twice as many science and engineering graduates as the US is presented as an advantage in the report. However, the report doesn’t address a natural question why those scientists don’t produce as much as those fewer in the US.

And it seems somehow strange to focus on such things as R&D, high-tech, clusters and other sophisticated economic formations when people in Europe cannot easily hire a plumber to fix a tap or a baby-sitter for their child.

No such thing as a free lunch
The McKinsey Global Institute suggests that insufficient competitive pressure is one of the most important factors in explaining the relatively poor use of productivity-enhancing ICT in the EU compared with its major competitors. Having admitted this fact, we shouldn’t wonder why services do not enter new markets – they are already scarce on their home markets.

Strangely, the report does not question, why. This is not R&D and not high-tech innovation. We cannot blame the market for failing to invest into these undertakings. Nor can we regret over the brain-drain because more hands than brain are required for most of the services that European citizens need and are ready to pay for.

We can only conclude that there is something wrong with the motivation to work in Europe. Or has work ceased to be a value in Europe?

To conclude, let’s get back where we started. Why do we need Lisbon? We need it for better living – high-quality education, health care and other services available in the market as well as the climate suitable for work and preservation of natural motivation to work.

How to achieve this? First, we need to promote competitive pressure and admit an ancient truth that to earn more people need to labour more and better. Contrary to popular statements, human dignity is not enough for attaining material wealth.

Second, before harmonizing regulations in the EU, make them smaller and simplified – this would make life easier for those who live under these regulations and those who are struggling for harmonisation.

The upshot of all this Sturm und Drang ? Europe is not Utopia-in-the-making, they are as divided and unsure which values member countries share or which solutions to endorse as are Blue and Red State Americans. Europeans are no less conflicted over social issues, corrupt, egocentric or parsimoniousness than their American brethren...nor are they more tolerant, honest, enlightened or generous. Antiquity has provided little insight or wisdom as the devastating wars of the last century demonstrated — they possess no magic beans or pixie dust — one global size does not fit all problems.

Europa is no longer a shining beacon in the West, we left her shores long ago and no longer require her approval or example, for better or worse, we have become an unique people with our own destiny.

Posted by feste at January 7, 2005 10:31 AM | TrackBack