The Failed Liberal Experiment

The last post (Non Polish Plumbers) concluded in an apparent contradiction. While the French people rejected the European Union constitution because they feared the influx of cheap Eastern labor and the decline of their welfare benefits, I saw the EU defeat as a triumph for Anglo-Saxon liberal economics and a fatal blow to the European social model.

Now, only three days after French voters rejected the document, the Netherlands voted “nee” by 63 per cent to 37 against the constitution. Dutch voters are upset about the price increases following the introduction of the euro. They fear that the admission of Turkey will worsen relations between Dutch Muslims and the Dutch majority, a mixed salad of cultural values nothing like the American melting pot. The Dutch people, the most liberal in Europe, worry that a sovereign EU could weaken their cherished liberal social policies tolerating marijuana use, prostitution and euthanasia.

It seems that the grand EU model of progressive socialism and multiculturalism is falling apart. New York Times columnist David Brooks relates the European experience to the dreams of American liberals. Most of the policy ideas advocated by American liberals have already been enacted in Europe: generous welfare measures, ample labor protections, highly progressive tax rates, single-payer health care systems, zoning restrictions to limit big retailers, and cradle-to-grave middle-class subsidies supporting everything from child care to pension security. And yet far from thriving, continental Europe has endured a lost decade of relative decline.

Western Europe’s standard of living is about 33% lower than the American standard of living, and it's sliding. European output per capita is less than that of 46 of the 50 American states and about on par with Arkansas. Moreover demographic trends make even the current conditions unsustainable. Europe's population is aging and shrinking. By 2040, public spending on retirees will have to grow by a third, sending Europe into a vicious spiral of higher taxes and less growth.

The liberal project of the postwar era has bred a stultifying conservatism, a fear of dynamic flexibility, a greater concern for guarding what exists than for creating what doesn't.

The paradox is that the European political elites, including Chirac, Schroeder and Berlusconi, are right in saying that free-market reforms and competition comprise the only path toward rejuvenation, more jobs, prosperous futures. In a land of negative population growth, immigration is necessary to sustain even a limited social welfare system. Yet multiculturalism, another liberal ideal, has led to Muslim isolation and mutual fear in Western Europe.

Thus the failed European experiment is a lesson in the futility of old liberal ideals. A governmental superstructure guaranteeing unsustainable social benefits while regulating free trade and suppressing immigration is doomed to endless decline.