Old Europe remains stuck in the mud, entangled in its governance of the euro, with an unfavorable demography
At the turn of the millennium, it was trendy to talk of the decline of the West and the rise of Asia and the BRICs (Brazil, Russia, India, China). The word was that the 21st was to be the century of Asia, and that the West just had to grin and bear it, the real anomaly of the last 200 years having been the boom of the West. The new century would restore the balance that had existed for at least a millennium.
The financial crisis that began in 2008 only confirmed these projections. In a replay of H.G. Wells’ The War of the Worlds, the United States seemed to have been laid low by the same virus of economic and financial liberalism with which it had inoculated the rest of the world. Not for nothing Warren Buffet, the American billionaire, defined subprime mortgages and financial derivatives as the real weapons of mass destruction of our time.
Across the Atlantic, the rest of the West seemed to be in not much better condition. In Europe too, a financial innovation called the euro, theoretically destined to protect its bearers from financial instability and ensure them a place in the 21st-century sun, became a nightmare, casting doubt on the European Union’s model of political and economic integration, while accelerating its global decline.
In 2000, the United States accounted for 50 percent of world military spending, and Europe for 50 percent of social spending. The difference between the hypertrophies of the one and the other did not change the result. While Asia produced and grew, the United States was trapped in meaningless military spending, and Europe in a welfare system that many said was unsustainable.
The crisis of the euro gave the Germans the false feeling that they had a little power
Not so fast. This construct about the decline of the West is lacking one leg. Though the United States originated the financial crisis, it is emerging from it. It is doing so thanks to its flexibility and capacity for innovation. Breaking all the rules of liberalism, the Americans have nationalized banks, insurance companies and even automobile insurance, injecting public funds and cheap money right and left into the economy. Unlike Europe, the United States has joined to economic flexibility an incredible faith in technological innovation. Two news items this week show that the US is far from being the beaten, retreating power people suggested it was. On the one hand, the revelations of Snowden and of several newspapers on the sheer dimensions of its communications trawl programs portray a world in which the US enjoys masterful, secure control of the great technological innovation of internet, which is so radically transforming our way of life. On the other, the fully robotized landing of a unmanned XB-47B drone on an aircraft carrier last week shows that the US is still going to be capable of maintaining the military hegemony on which its global power is based.
To all these technological assets, the US adds an energy revolution of the highest magnitude, not only ensuring itself a sustained energy supply at low prices, but also greater independence and margin for geopolitical actions. And it has another factor that Europe lacks: a booming demography that results in higher productivity and a lower level of dependence.
What remains stuck in the mud is Old Europe, entangled in its governance of the euro, with an unfavorable demography, incapable of rolling back its energy dependence and, as we have seen, technologically subjugated to the US. The fact that only in Germany have murmurs been heard about submission to the US reveals the state of things in Europe, though the rest of us threw in the towel some time ago. The crisis of the euro gave the Germans the false feeling that they had a little power, and counted for something in the world. Welcome to the club of geopolitical humility. Are we Europeans going to do something about it, or just let things happen?