Chicago Boyz

                 
 
 
What Are Chicago Boyz Readers Reading?
 

 
  •   Enter your email to be notified of new posts:
    Loading
  •   Problem? Question?
  •   Contact Authors:

  • CB Twitter Feed
  • Blog Posts (RSS 2.0)
  • Blog Posts (Atom 0.3)
  • Incoming Links
  • Recent Comments

    • Loading...
  • Authors

  • Notable Discussions

  • Recent Posts

  • Blogroll

  • Categories

  • Archives

  • Straight Talk

    Posted by James R. Rummel on March 13th, 2005 (All posts by )

    A new report was recently released that has very few surprises for people who read the blogs. According to a study conducted by a European Union small business organization named Eurochambres, the United States economy is about 20 years ahead of the EU in just about every category. (You can read the report yourself, in PDF format, here.)

    The study is surprisingly frank in its assessment of the EUís chances to catch up with the US. Even with the best possible conditions it will take decades or even more than a century for the EU to achieve parity. And this will only happen if hard decisions are made right now.

    One thing I also found to be very refreshing is that the report makes no bones as to which country the EU is trying to best. Claims that Europe is merely trying to find a more efficient system of internal governing without looking to become a rival of the US are becoming less credible with every year.

    It appears to me that the biggest problem the EU faces is the drain on the economy due to its cradle-to-grave Socialist-style welfare system. For some reason, I donít see the report even mentioning this directly. This is probably because the retirement and government subsidized benefit system is a big sore point in the EU. Proposed cuts in these benefits, even changes that we in the US would have characterized as being mild to middling, have been met with a great deal of protest by the voters.

    Right now the US has a greater degree of political influence, military power, cultural dominance and economic might than any other society in the history of the world. Itís obvious that this state of affairs canít continue forever. But itís also obvious that the EU isnít going to move to the head of the line if they canít get a handle on the situation created by their own internal policies.

    (Big slobbery hat tip to Ace.)

     

    23 Responses to “Straight Talk”

    1. Andrew McGuinness Says:

      The only fundamental error here is in treating “the EU” as an aggregate worth studying.

      A collection of countries, from Finland to Cyprus, with enormously divergent political cultures, cobbled together by a corrupt political class into a “fantasy-politics” superstate — I will be surprised (and horrified) if the EU exists in 20 years time, never mind a hundred.

    2. Steven C. Den Beste Says:

      For at least the last fifteen years, Old Europe’s preferred solution to the gap was to try to cripple the American economy via “multilateral” treaties which they hoped to shame the US into ratifying. The Kyoto accord was the most notable example of that, but far from the only one.

      Now that’s it’s clear that their preferred strategy for winning the race (i.e. hobbling the leader) is a failure, will they concentrate instead on trying to run faster themselves? Nope; they’ll just complain and moan as they fall further behind.

      And when, in ten or thirty years, it all collapses around their ears, Europe will once again turn to its favorite solution to economic failure: fascism.
      Feel afraid.

    3. GUYK Says:

      I doubt that the EU lasts as much as twenty years for a couple of reasons. One is that I suspect that members will soon tire of what seems to me like bullying by Germany and France who appear to want to run the show. Second is the reports of 10 plus percent unemployment in some of the membering countries. With this kind of financial drain on the cradle to grave social systemtaxes on both business and workers is sure to rise. Socialist systems only survive when there is incentives for the capitalist to produce. How much longer will this incentive be available.

    4. Richard Heddleson Says:

      I think this report needs some salt as it appears to be prepared by an interest group to advance its own agenda. I’d be interested in seeing the back-up to the press release. All these numbers look a lot worse now than they did before the accession of the last 10 members (in the last year?). On the otherhand, these 10 countries should be able to help Europe’s aggregate numbers as they play catch-up.

      In any event Europe’s real problems are moral. They show up most irreversibly in the demographics. The Europeans are heading to a tipping point from which they will not be able to recover and which will result in their culture bieng swamped by migrants. Too bad.

    5. David Foster Says:

      “…research and development. Europe is expected to catch up with the US in 2123 and then only if the EU outstrips America by 0.5 percent per year in terms of R&D investment.” This is idiotic. You can’t measure innovation by counting the numbers that are categorized as “R&D” on accounting statements. In real life, innovation often comes from the interaction of a company with its customers, and involves people such as marketing product managers and even sale representatives…who are almost certainly not counted under the “R&D” numbers.

    6. Steven Den Beste Says:

      David, sometimes innovation comes from interaction with customers, but much less so than you might think.

      As an engineer, I know that ideas are easy. However, technology is hard. The difficult part is not figuring what you want, it’s figuring out how to do it.

      I have a wonderful idea: let’s find a cure for cancer. Now all you have to do, David, is figure out how to do it. Let me know when it’s ready.

    7. David Foster Says:

      Steven, I certainly understand that there is more to innovation than “ideas.” Very often, the innovation occurs when you get the customer need together with the creative engineers. Example: the first major commercial real-time system, Sabre, resulted from a change meeting between an IBM sales rep and the CEO of American airlines, which in turn certainly led to a lot of very hard software engineering work. Did the development of Sabre constitute innovation? Maybe one could argue that in a technical sense it did not, since many of the ideas in Sabre were prefigured in military systems such as the SAGE air-defense system. But in an economic sense, Sabre certainly constituted innovation. I think the problem in some European countries is more that it is difficult for people to successfully act as the internal champion of something like Sabre than it does any lack of “mass” in their research and engineering staffs. There are certainly many fine Europeans in any scientific or engineering discipline you could name.

    8. David Foster Says:

      To continue…my main objection to the R&D point in the article was the idea that innovation is something that can be so precisely quantitified that one could say something like “catch up with the US in 2123 and then only if the EU outstrips America by 0.5 percent per year in terms of R&D investment” with a straight face.

    9. Mitch Says:

      Even if the Europeans pull out of their flat spin, India has most of the elements in place to fly past them.

      China is another issue — huge potential, huge industrial base, huge exports, and huge problems, even more severe than those building up in the EU (big long-term issue: excess young males + frustrated expectations + sclerotic political structure + displaced population = BANG!).

    10. John J. Coupal Says:

      “…it’s here they’ve got the range, and the machinery for change…”

      Leonard Cohen
      Democracy (is coming to the USA).

    11. David Foster Says:

      The other problem many EU countries probably have is this: the kind of immigrants they attract is not likely to be optimum from an economic standpoing. Why would an ambitious individual want to move to a country in which career advancement and entrepreneuriall activity are relatively difficult?

    12. Giles Says:

      The mcguffin here is that assumption that each of the various indicies grow ďby 0.5% faster than the USĒ Ė if say European R&D grows by 1% faster Ė then you can more than half the times, by 2% faster, then more than quarter the times. And these growth rates are entirely feasible Ė Asia and Ireland have recently managed such feats.

      What is more interesting is that is shows how PR by business lobbies now works within the EU. Theyíve discovered that merely saying that doing x y or z will be increase efficiency, reduce unemployment etc falls on deaf ear. Insert a reference to slaying Big Satan in economic terms and the Brussels gnomes may pay attention.

    13. Ralf Goergens Says:

      James,

      there is nothing wrong with wanting to catch up or even to overtake the Unites States, as long as we aren’t trying to do by pulling you down.

      Steven,

      Kyoto is about the environment. The claim that it is supposed to cripple your economy is nothing but a conspiracy theory.

    14. James R. Rummel Says:

      there is nothing wrong with wanting to catch up or even to overtake the Unites States, as long as we aren’t trying to do by pulling you down.

      Never said that it was, Ralf. In fact, I’ve always said that it would be best if we had some decent competition. But I think it’s pretty obvious that most of the efforts in this area are geared more to screwing over the US than to boost the EU’s economy.

      Besides that, the main thing that bothers me about the rhetoric I’ve been hearing coming from the EU is the claims that they’ve somehow come up with a superior system even though they’re lagging so far behind the US, and that they’re morally superior because they follow these failing policies.

      Kyoto is about the environment. The claim that it is supposed to cripple your economy is nothing but a conspiracy theory.

      If it’s only about the environment, then it’s one of the most poorly constructed piles of wishful thinking that I’ve ever seen.

      If, however, one views it as a scheme to wreck the US economy then it’s pretty well thought out.

      James

    15. Ralf Goergens Says:

      But I think it’s pretty obvious that most of the efforts in this area are geared more to screwing over the US than to boost the EU’s economy.

      Not that I’m aware of it. Which efforts do you mean? Don’t forget, the European economy would be damaged at least as badly as yours.

      And as far as the rhetoric is concerned: Unelected Eurocarts don’t speak for anybody than themselves.

      If it’s only about the environment, then it’s one of the most poorly constructed piles of wishful thinking that I’ve ever seen.

      If, however, one views it as a scheme to wreck the US economy then it’s pretty well thought out.

      I agree that it’s ineffectual, but the EU adopeted it years after it became obvious that the US would never do so, so I really can’t imagine that this is supposed to be aimed at the American economy.

    16. Ken Says:

      I wish to hell some other country would straighten themselves out and challenge the US for dominance in the marketplace.

      After the most recent election, our friends on the left made noises about leaving and heading for greener pastures. We can’t do that – we’ve got no place to go. Unfortunately, America is the best the planet has to offer.

    17. Mal Says:

      “I agree that it’s ineffectual, but the EU adopeted it years after it became obvious that the US would never do so, so I really can’t imagine that this is supposed to be aimed at the American economy.”

      Ah yes, this would be a sensible thing to do, especially if they had spent so long trying to work and build on it. At that point, it would be silly to discard it, and the EU could take the “moral high ground” (as they see it, at least) by ratifying the thing anyway and following it… more of an attempt to shame the US than anything else. I’d be more inclined to support the treaty if it actually spelled things out in no uncertain terms, was based on solid scientific data, and applied to more than just a fraction of the world.

    18. Ana Says:

      Yes, but are you happier?

    19. Fred Says:

      Yeah, the numbers are BS.

      Think where, say, China or Singapore were 20 years ago, or check Germany’s economic growth record from 1880? or so to 1914?

      Once “the feet come off the brakes and someone stomps on the gas”, countries can surge forward at astonishing rates of growth, and Europe is starting from a much bigger economy and higher knowledge baseline on “how to do things” than the examples above.

      Doesn’t mean they will, China screwed itself for centuries after all with it’s intellgentsia policies.

    20. mishu Says:

      Kyoto is about the environment. The claim that it is supposed to cripple your economy is nothing but a conspiracy theory.

      If that’s true, why are countries like China and India let off the hook? These countries live under a brown cloud of soot.

    21. lindenen Says:

      Regarding Kyoto:

      “Why? On the one hand, climate policies are redistributionist policies, so the recipients of redistributed money (for example, the renewables industry) have an incentive to support them. Other industries are lobbying their governments to be protected from foreign competition – and environmental regulations work as non-monetary trade barriers, since they result in the exclusion of some potential competitors (that are not able to meet the requested standards) and cause higher costs – thus less competitiveness – for others. Finally, as Driessen puts it, “The EU’s self-interest is highly visible in its insistence that Ireland, the United States, Eastern Europe and other nations adopt a system of ‘global tax equity’ or ‘tax harmonization.’ This is bureaucratic code for a compelling the United States to raise its taxes to EU levels, to prevent ‘disruption’ and eliminate ‘unfair and harmful tax competition’.” In other words, most EU governments are willing to make economic life more difficult in order to maximize their power over society.

      If this is true, one has to admit there is nothing noble in promoting climate policies. Nor could their outcome be desirable. Inefficient industries and politicians in power would be winners, but everyone else loses.”

    22. Tyouth Says:

      Kyoto is about the environment. The claim that it is supposed to cripple your economy is nothing but a conspiracy theory.

      Conspiracy theories are sometimes right but the real point is that it doesn’t need to be a conspiracy to damage US economy. God save us from well meaning (or not so “well meaning” ) people.

    23. GUYK Says:

      The comment by Tyouth is an example of why the EU will not last long. Why accept facts if the truth doesn’t support the agenda?