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The Quiet Economic Miracle?. The European Economy. In the News. French Oui vs. Non campaign http://news.bbc.co.uk/1/hi/world/europe/4442823.stm http://news.bbc.co.uk/1/hi/world/europe/4446711.stm Basque Nationalists Win Seats http://news.bbc.co.uk/1/hi/world/europe/4453239.stm.
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The Quiet Economic Miracle? The European Economy
In the News . . . • French Oui vs. Non campaign • http://news.bbc.co.uk/1/hi/world/europe/4442823.stm • http://news.bbc.co.uk/1/hi/world/europe/4446711.stm • Basque Nationalists Win Seats • http://news.bbc.co.uk/1/hi/world/europe/4453239.stm
The “New Economy” • In late 1990s, Europeans began to talk of new economic paradigm • Low wages, low unemployment, low or no inflation, high growth • “Goldilocks economy”—not too cold, not too. . . • “new economy” • Efficient computerized systems (labor) • Global competition in labor markets • Lower prices for many industrial raw materials • Growth did not spark inflation • Jeremy Rifkin views this new paradigm in Europe as a quiet revolution
Rifkin, p. 59 “While we Americans continue to look to the Pacific and Asian economies for signs of quickening competition and greater commercial opportunities, a quiet economic revolution of a different sort is taking place in the land of our European forebears, of which we know very little and to which we are ill prepared to respond.”
European Economic Growth • According to Rifkin: • EU World’s largest trader in services • EU’s GDP higher than US • EU’s population 455 million; US 293 million • In 2000 EU heads of state agreed to “Lisbon Agenda” • To make EU "the most competitive and dynamic knowledge-driven economy by 2010"
European Economic Growth • National examples • Ireland as “Celtic Tiger”: High tech-informational or ICT (information and communications technologies) economy • Dell, IBM, Microsoft, Compaq, Sun Microsystems, Cisco, Gateway, Oracle, Hewlett-Packard, Novell, AOL, and Ericsson. • Finland and Sweden too • Challenged by dot.com bust • Dutch “Polder Model” in mid-late 1990s • Consensus economic policymaking • Between government, unions and employers • Led to low wages, no unemployment, high growth • Polder model has since collapsed? • Decline in Dutch economic growth • 1999: 3.9% 2000: 3.3% 2001: 1.3% 2002: 0.2% • Unemployment above 5% • Turnaround has led to questioning
Economic Miracle? • According to study by Dr Fredrik Bergström, President of the Swedish Research Institute of Trade, and Mr Robert Gidehag, President of the Swedish Taxpayer's Association entitled EU vs. USA • GDP per capita in EU is well below US • Without major structural reforms has no hope of reaching US levels • Is failing to live up to Lisbon Agenda • “Euroschlerosis”? Burdensome gov’t programs
Economic Miracle? • According to study by Dr Fredrik Bergström, President of the Swedish Research Institute of Trade, and Mr Robert Gidehag, President of the Swedish Taxpayer's Association entitled EU vs. USA • GDP per capita in EU is well below US • Without major structural reforms has no hope of reaching US levels • Is failing to live up to Lisbon Agenda • EU Commission Report (Jan 26, 2005) pointed to renewed ways to meet Lisbon goals • Economic prosperity will follow political solidarity and security • Effective EU governance, enforcing legislation • Adopting the Constitution!
US and Europe: ‘Comparing Chalk and Cheese’? • GDP is a poor statistical measure of quality of life • Measures value of goods and services produced in a country in a year • Includes all economic activities as positive value • Clean-up of pollution • Costs of non-productive social services like prisons, hospitals, defense, policing, courts. • Many things that don’t improve quality of life of citizens • Need to question GDP as measure of economic wellbeing • Fails to account for income distribution and individual debt (actually shows as a GDP gain) • Balance of Trade: national debt
Best Place in the World • http://news.bbc.co.uk/1/hi/world/europe/4020523.stm