Europe 2020: Merchandising By Any Other Name

Europe 2020 is not so much a strategy as it is an escape forward; a passing of the hot potato.

Following in the footsteps of the Lisbon Strategy, Europe 2020 was devised by the Barroso Commission as a common growth scheme for the European Union. The need for such a plan arises from the reality of the European economy in the past decades, one of slow growth and even stagnation. It is not as if Europe is not economically successful; it rather matters that its lead is wearing out against new emerging markets.

The impetus for this plan also arises from the fear that Europe’s social democratic model is highly dependent on growth for the maintenance of social endowments and that without it, such benefits will have to be phased out. The politicians who are to do it will likely be electorally punished as a consequence. French president Nicolas Sarkozy is one such paradigmatic example. His increase in the retirement age was economically sound but politically damaging.

What then could make Europe grow? It certainly cannot rely on natural resources as it is a small territory and demographically dense. Even when resources are discovered like recent findings of shale gas in Poland, their exploration does not suffice to fuel an entire national economy.

Europe certainly cannot compete in production either as the emerging economies possess cheaper labor and bigger markets.

Shopping for competitive economic models, Europeans came to the so-called “knowledge based economies.”

Drawing inspiration from the Asian tigers and Western economic miracles as Israel, Switzerland and the Scandinavian countries, it was determined that given enough funding, the educational system could be made the cornerstone of economic growth in Europe as a whole. The old continent was to become a huge Silicon Valley and economically compete with high end technology in the global market, thus offsetting losses in production delocalization — to emerging economies — or raw materials dependency — since the advent of decolonization.

The rationale isn’t as logical as it may appear however. In Asia and in the West, economies as those of Denmark, Hong Kong, Israel, Singapore and Taiwan are successful due to very specific conditions that Europe as a whole does not share.

These are small economies. It is easy to apply a single economic model to a small territory. One can find paradises of prosperity in even the largest of the poorest countries but that does not mean that the entire economy can follow the same path.

One of the main foundations for prosperity is access to sea and the facilities in commerce that arise wherewithal, which continentally sized territories cannot emulate.

Proportionately however, it is not possible for a large economy to specialize itself in anything because both manual and white collar labor are needed. There is then an invisible threshold of how many college graduates Europe can absorb which cannot be artificially expanded.

In the aforementioned nations, we are dealing with homogeneous societies. Political reforms and labor specialization are much more likely to naturally occur in small agglomerates of population than in large and diverse ones. Europe, by contrast, is very diverse in its cultural and geographic circumstance.

Finally, there is the question of productive work ethics. In Asia as in Europe, the more northern populations possess the most productive mentality. What has caused this divergence remains topic of academic debate. What is clear is that the northern hemisphere is the most industrialized while most of the pockets of similar economic development in the south are in territories which were heavily colonized by northern populations.

Just as Hong kong, Singapore and Taiwan are all ethnically Chinese, Switzerland and the Scandinavian countries are all protestant societies while Israel was heavily settled by Ashkenazi Jews coming from these same nations.

The point to retain here is that the very specific conditions which originate knowledge based economies in the aforementioned countries are not present in a territory as big as Europe and cannot therefore be extrapolated as a solution for its economic woes.

This ‘strategy’ is then a mere political artifice that contributes little other than feeding hope to an electorate whose representatives depend on popularity to politically survive; an artifice which ultimately prevents painful yet necessary reforms from being undertaken at the earliest and most opportune juncture. Austerity would need to be accompanied by structural reforms that would limit the size of the state apparatus, foreign policy would need to be reformed into a less charitable and more cunning agenda and the Single Market would have to diversify the individual strengths of each economy rather than supposedly trying to make them all uniform according to unreachable standards, such as those of the Nordic economies.

Europe 2020 is not so much a strategy as it is an escape forward; a passing of the hot potato.