On March 14 German Chancellor Gerhard Schroeder delivered a much-anticipated speech outlining his latest plan to rescue the German economy from the doldrums. The speech was an impassioned appeal to continue to defend German workers against the evils of capitalism.
“Our country has not,” Schroeder said, “become economically strong through the law of the jungle, through indiscriminate hiring and firing.” Indeed, to Schroeder’s eye, there is hardly anything worth cutting, right down to the generous dental benefits. “I do not want to return to an era when you can judge someone’s wealth by the state of their teeth,” he observed.
It is wholly appropriate that such a speech could be delivered at the height of the tension between Germany and the United States, for the content of the speech explains better than anything the surprising intensity of the opposition to the U.S. from “Old Europe.” President Chirac, after all, has paraded around the world actively recruiting opponents. His smug and malicious actions could hardly be more brazen if he were militarily allied with Iraq.
So the question naturally arises, why do they act as if they hate us? Schroeder’s speech provides a glimpse at the answer. Indeed, an analysis of the economic philosophies of these nations suggests that something more deeply rooted in the struggle between left and right is at the core of this conflict.
Europe is undoubtedly currently divided. Some countries — the U.K. and Spain come to mind — support the U.S. while France, Germany, and Belgium do not. What do those who oppose the U.S. have most in common? That question might arouse hours of debate amongst political scientists, but not economists. There is a striking and significant difference between countries that support us and those that do not. The countries that do not support us have terrible economies, and have had terrible economies for a long time. Weasels they may be, but “axis of losers” may be a more precise moniker.
The facts are striking. For the last decade for which there is complete data, the average annual growth rate of real GDP of the western European countries that support us is about 3%. The average annual growth rate of those that do not is just 1.9%. For 2002, the average unemployment rate of those countries that support us is 6.1%. The average for those opposed is a lofty 8.1%.
What explains the large differences? Two factors stand out. First, our opponents have enormous governments that on average consume 46.4% of GDP. Our supporters have governments that are on average 15% smaller. Second, our opponents have highly regulated economies and governments that are close to large and extremely influential labor unions. In Schroeder’s Germany, for example, an unemployed worker can probably sue if he is fired, and receives unemployment benefits for 32 months after that. No wonder the unemployment rate is above 11%.
Perhaps the most remarkable thing about the economic stagnation of the axis of losers is that it could endure for so long and not create political turmoil. This has been accomplished by repeated descriptions of the terrible fate awaiting the unjust capitalist states. As clearly evidenced by Schroeder’s speech, Old Europe embraced the view of capitalism formulated by Italian marxist Antonio Gramsci. Gramsci viewed liberal democracy and capitalism as an edifice designed to benefit the privileged at the expense of the oppressed. The privileged control the oppressed by indoctrination into a belief system that reinforces the oppression. A key first step to social justice is the destruction of the capitalist belief system, to fight the view that capitalism, as practiced by the Americans, can ever lead to just outcomes.
When asked to abandon their welfare state, Old Europeans have declined, stating that it is immoral to expose poor workers, as the Americans do, to the law of the jungle. Sure the cowboy capitalists have higher economic growth, but their society is so unjust that it will inevitably become unstable. The oppressed will rise up against the capitalist Americans much as the French peasants rose up against the oppressive royalty.
Our conflict with al Qaeda and Iraq, then, is our own fault. If we had been more concerned with social justice, and less concerned with the spread of global capitalism, then the poor aggrieved terrorists would not have attacked us.
Desperate measures are for desperate people. The view that socialism helps the poor has been defeated by the data. A recent Columbia University study by economist Xavier Xala-I-Martin, for example, identified the spread of capitalism as the key force reducing poverty around the world. Such well-documented views have spread to the voters as well, even in Old Europe. Schroeder’s popularity, judging from the polls, is approaching the Jeffrey Dahmer level. But the Gramsciites have one last play. If capitalism eventually will lead to unrest, then perhaps turmoil in the Middle East can prove them correct. Having lost the economic battle of ideas, European socialists have turned into rabble-rousers, even selling illegal arms to Iraq, as was recently reported by William Safire of the New York Times.
Terrorism and chaos is the only thing between their failed philosophy and the dustbin of history. Chirac and Schroeder are doing their best to defend their faith.
— Kevin A. Hassett is resident scholar at the American Enterprise Institute.