Post-Brexit: EU Still a Superpower
By Steven Hill
The Globalist
June 27, 2016
If you type the words “European Union” and “crisis” into the Google search engine, you instantly receive 115 million hits. When I did that back in 2009, before the eurozone crisis, “only” 58 million hits popped up. Is the EU really in that much worse shape today? Apparently yes, according to the daily headlines. Recall that even before the Brexit vote, French Prime Minister Manuel Valls declared that Europe could “fall apart within months.”
But this is not the first time that political leaders and media outlets have declared the end of Europe. Prior to the economic crisis of 2008, the European economy was written off by most analysts as suffering from “Eurosclerosis” and condemned to decline.
Here’s a small sample of brassy headlines from leading media outlets over the last decade, trumpeting imminent collapse:
“The End of Europe”, “Europe Isn’t Working”, “Will Europe Ever Work?”, “What’s Wrong with Europe”, “Is Europe Dying?”, “The Decline and Fall of Europe”, “Why America Outpaces Europe”, and many more. In the 1990s, The Economist dubbed Germany the new “sick man of Europe,” and other media doomsayers warned of a future of rising unemployment, crime, and taxes to “a level not seen since the Weimar Republic.” Yet now a prospering Germany has become a global player.
The superpower rationale
Yes, the EU is juggling a number of daunting situations, but that’s what superpowers do. They deal with one crisis after another, year after year, some of them domestic and others international.
A superpower by definition occupies a big corner of the world, in which messes happen and things have a tendency to fall apart.
That rationale, always applied to the United States of America, also has its place when analyzing the EU. But does the EU really qualify for that lofty status? Emphatically yes. First, the EU is powered by one of the world’s great economic engines. Even with the eurozone crisis, what I call the EU-Plus (EU28 + Norway and Switzerland) still has the largest economy in the world (post-Brexit, the UK would still be part of the EU-Plus, due to the deep integration of the UK and EU economies). These nations produce a quarter of the world’s GDP.
Indeed, according to World Bank figures, the EU-Plus economy is larger than that of the United States and India combined.
It has more Fortune 500 companies than the U.S., India and Russia combined, and some of the most competitive national economies according to the World Economic Forum (European countries hold 13 of its top 25 rankings). This vitality extends to small and medium-sized businesses (SMEs), which provide two-thirds of Europe’s private sector jobs and 85% of net job growth (in the United States, SMEs only provide half the jobs). I hear many leaders complaining, “Europe isn’t innovative enough. Where are the European Facebooks, Googles and Apples?” Before we fall too much for that Silicon Valley-hyped rhetoric, let us just remember that those companies actually don’t create that many jobs. They are using software and algorithms to replace human workers. You want innovation? Take a look at Germany’s Mittelstand (i.e., small and medium sized) companies which are world-class exporters as well as job creators, making products that are crucial to industrial growth all over the world. So much for excessive red tape supposedly strangling the European economy. In another display of bold innovation, Europe has led a small revolution for greater economic democracy and a broadly shared prosperity. It is based on practices like codetermination, works councils, effective labor unions and the “visible hand” of an active government that guides the “social capitalist” economy.
These are things largely unheard of and/or unimaginable in the United States to date. The way in which Bernie Sanders’ campaign resonates with large swaths of young people and others underscores that there is a stron appetite in the U.S. for a similarly fairness-based approach to the economy.
EU as world leader while US stands still