Transcript
Jeremy Shapiro: There is really a unique combination in Europe of a broad liberal market with decentralized government which allows for a lot of experimentation. And these are, arguably, as a result the most successful nations in the world. And for this reason for every book of doom about Europe there is one predicting that Europe is ascendant, that it will rule the 21st century, to quote one example. I think Europe's problem, ultimately, as Professor Alesina asserts, is its future, and this problem comes not from Europe itself, although all these dysfunctions are there, but at its root it comes from competition with others from the U.S. most particularly, but also from China, from a globalized world that will, in essence, render Europe's wonderful model or perhaps some of its many models unsustainable unless there is major reform.
This is a significant distinction, I think, because it means that Europeans don't fundamentally want change; it is being thrust upon them. It also means, however, that whether or not this change will be thrust upon them, I should really say to what degree depends not only on the degree to which Europe is failing to keep up, but others' relative success. And Professor Alesina, I think, rightly focuses primarily on the U.S. as a comparator. But I might point out that it's far from clear that the U.S. model is sustainable for reasons that are very different than the ones that are outlined in this book. I think for the U.S. the problem is not enough social protection which is leading to rampant insecurity and increasing political demands for protection that the government cannot or will not satisfy. These are, of course, fundamentally political problems and therefore insoluble. But if the American experience is a guide, reconciling the conditions necessary for high growth with sufficient social protections to mute populist calls for protectionism and xenophobia is no easy trick. So this model needs to be set up against the European model, I think, to understand which one is more sustainable.
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