The horizon is not so far as we can see, but as far as we can imagine

How Europe Could Reinvigorate Their Economy

Every once in a while it’s important to do a policy piece, to show how society could work if we wanted to do the right things. Not because I think anyone in the West will implement enough good policy to matter, but to show that it is possible.

Back at my last corporate job I did a major workflow redesign. In the notes to management, along with the technical details were two highlighted lists. I noted that in order to receive the benefits of the change:

  1. Do these things, and;
  2. Don’t do these things.

Management appears to have reversed the lists. I left not long thereafter, and I was one of only two people who understood the entire workflow of the department. (I accept plenty of the blame, I didn’t play politics well or understand the sheer cupidity of management. I should have understood the second at least.)

The point is that policy often requires a number of actions to be taken, and that opposing action not be taken. You can’t just pick and choose: policy actions must support each other.

Big Picture On The European Economy

Europe is in decline.

  • Energy costs are too high for their heavy industry and many modern internet and computer technologies.
  • They are not in play when it comes to scientific and technical research.

  • They don’t produce significant raw or refined resources compared to other regions, with the single exception of basic agricultural crops, and the end of AMOC will smash European agriculture, probably sometime between 2025 to 2075;
  • The Chinese are pulling ahead in major export fields, like automobiles;
  • They import much of what they need, and pay for it with exports;
  • They aren’t creating a lot of new companies with new products and are, generally, falling behind in old technology;
  • Much of their industrial base is moving out of Europe (Germany, mainly). Much of that to the US.
  • Their cost structure is too high,

European prosperity was based on being able to sell advanced tech to less-developed country. Until recently, if you wanted that tech you could get it from Europe, the US, or other Western allies like Japan, Taiwan and South Korea. But now that tech can be bought from China, who almost never sanction, don’t lecture and sell and finance for less while not telling less-developed countries how to run their internal economy.

The IMF was the main economic enforcer in Western hegemony. These austerity policies in developing countries were generally a direct result of IMF requirements, or undertaken due to general financial pressure:

But this ability to force the third world into selling cheap resources to the West in exchange for Western tech and finance is coming to an end. Burkini Faso recently declined an IMF loan which was contingent on austerity measures, for example.

So Europe is in serious decline, and the structure of the world economy is moving from one designed to support it to one that no longer needs it. To put it in market terms, they’re actually going to have to compete again, and can’t keep coasting on advantages created generations ago.

Like this lists I produced for my ex-bosses, the policies which follow are intended to work in concert. Each of them is required, not optional. It will be obvious that his wish list is politically impossible, which is part of why European decline will continue.

End Austerity

Europe still has a fair bit of room to maneuver. They produce plenty of food and they still have a fair bit of industry left. Austerity needs to end. Government needs to spend. What it should do is arrange that spending to be used mostly on internal goods: if you give money to people for food, you want them to buy what Europe produces. Domestic production must be ramped up for what people and companies need and the necessary tariffs, barriers and subsidies put in place so that government spending mostly creates European demand. (Many further policies are based around making this happen.)

End Neoliberal Taxation

This means high marginal tax rates on income, including corporate income. High estate taxes. High corporate taxes on profit not reinvested. End all stock buybacks and stock options and end the doctrine of shareholder supremacy.

Institute excess profit taxes on all old products, probably basing profit levels on 2019. New products will be allowed to make higher profits, perhaps as much as 30%, with the amount of time dependent on how new they are. A product which is only a minor upgrade or alteration will not qualify.

Understand that government’s job is to create positive externalities. Government can fund actions, like good education and health and industrial subsidies because it doesn’t care who makes money from them. But this is only true if it recaptures that money from whoever is making lots of money. You let ordinary people keep most of their income but you take most of the money back from winners, then plow that money into further policies which create positive externalities.

So high marginal tax rates are necessary to run good industrial and social policy.

You also need to ensure that companies are using their profits to reinvest into the business, especially with reference to creating new products.

While you’re at it, you must put an end to moving money offshore to avoid taxation. No significant amounts of money moves outside of Europe without being taxed first. Criminal sanctions for anyone who tries and anyone who makes it possible.

End Sanctions and Sanctimony

Unilaterally end all sanctions against China and other countries, including Russia. You need their cooperation to fix your economy. Stop lecturing other countries on human rights, unless they reach severe heights like genocide.

Cut deals with China and Russia

From Russia you need cheap resources. Force the Ukraine war to an end, fix the pipelines and be good business partners.

China’s a harder nut: China is now ahead of Europe. What Europe needs is deals to allow it to keep some of its advanced areas. To get these deals they’re going to need to let China into the European market in other areas. Where Europe is behind, but wants to catch back up (electric vehicles, for example) they should bargain for branch plants in exchange for market access.

End Imposed Third World Austerity and Forgive Debt

Since the ability to coerce the third world is ending relationships will have to fairer. Forgive most of their debt, get rid of the IMF as it now exists and reform the World Bank. Cut deals for needed resources without requiring control over internal politics. Europe now has to compete with China to buy what it needs from the third world and thus will need to offer actual good deals. An end to third world austerity will also lead to better markets for any European goods.

Reform World Trade Laws and Learn How to Tariff and Subsidy

Europe will need to produce what it can domestically because it isn’t going to be able to buy much of what it needs from foreign countries. To make European goods competitive will require tariffs and subsidies. This will have to be negotiated with other countries and if Europe wants to do it, they have to allow others to do it as well.  The idea that “foreign made” is cheaper is only true if you have enough money to buy foreign made and remember that they have to want your currency. The Euro is going to be worth less and less until or if Europe creates enough tech that others must have and can’t get cheaper elsewhere.

If you can’t reform the WTO and so on, then leave and make a new organization or bilateral treaties, especially with China.

And get rid of almost all ability for private companies to sue countries for domestic laws. Countries need to have policy freedom and other than branch plants and so on Europe will require that most business is domestic.

Reduce the Cost Structure

Economic rent must be hunted down and killed. Landlords should make a decent living but not get rich. Housing should be turned into a utility: relatively cheap and easy to afford. (Some European countries are close to this already, some aren’t.) High returns on financial games must be ended: move to public (postal) banking. End high returns on financial companies. Break up the big financial firms, and make the new smaller banks and finance companies loan to new businesses. End stock market bubbles and enforce 50s style financial regulation.

Where utilities, roads, trains and so on have moved into the private sector, nationalize them.

As a general rule no one gets wealthy without creating new products for export or creating products which reduce the need to import, and billionaires become a thing of a past.

Kill Admin Bloat

Pull out your favorite admin bloat chart, look at what the administrative percentage was back in the 60s, and aim for that. The teeth to tail ratio needs to become much higher. If you aren’t doing the actual work of an organization, what you do to support it must be actually necessary. In general to receive subsidies you must reduce this bloat or your funding is cut off. There are a lot of subsidies already and in such a regime there will be much more.

We don’t want to be paying for useless jobs.

Reform tax codes to make them far simpler. Go thru the extensive regulations Eurocrats love to much and change most of them to ends, not means, then hire lots of inspectors and auditors. “We don’t care how you achieve the following environmental or workplace safety metrics, but we will check to see if you do and if you don’t we’ll fine you first (actual decision makers, not the companies), then put you out of business and if you hurt people, put you in prison.”

End Corporate/University Research Partnerships

University researchers should be government funded. Corporations who want product research should pay for it themselves, and generous subsidies should exist.

Fix Universities and Colleges

A lot of this comes ending admin bloat. Start there. Faculty should teach, some should research as well as teach and faculty must be forced to take control of universities again, with significant power for students. Administrators must have no significant policy power.

Academic publishing as it exists now must end. All academic publishing must be free and online.

All patents that are a product of government funded research are free for domestic use and available for foreigners with a fee.

Academics must no longer be judged based on volume of research. Their work must actually be read, those who hire or promote them must sit in their classes and witness their teaching. Replication of results must be emphasized and funded.

Research funds must be spread around far more, with fewer and weaker “principal researchers.”

Ties with advanced universities in foreign countries must be emphasized and student exchanges encouraged. Yes, this means China, which has most of the world’s best universities for science and technology now.

Kick NATO out and Form a European military

If you want to avoid further forced centralization form it from national units. Europe needs to make policy America isn’t going to like, it can’t do that while occupied.

Force the US to reduce embassy staffs by 90% and remove all US NGOs and similar organizations.

Same reasons. As the joke runs, “why doesn’t America have coups? Because it doesn’t have an American embassy.” America has too much influence in Europe. Reduce it.

Vastly reduce lobbying

Entrenched interests can’t be allowed to control government

Allow national subsidies to Mitigate the Effects of the Euro

For some countries the Euro is too high, and that makes their industry uncompetitive. For others it is too low and this gives industry a subsidy. Allow countries to subsidize industry to make up the difference if necessary and perhaps tax countries which are benefiting.

Make Creating New Companies Easy

Easy business loans, easy registration and removal of barriers of industry are key here. The policy of regulation by results will also help, since it reduces the massive burden of endless regulation with a simple “make sure you’re meeting our regulatory goals.” Subsidize chosen industries and make those subsidies easy to get, but audit for results and cut off those who aren’t making it.

Subsidize new companies, reduce their subsidies over time.

Make bankruptcy easy, frequent and painless. If a company fails, it fails. You keep your home and enough money to get by on for a couple years.

Final Remarks

We could go on, or each point could have its own full article, in many cases an article many thousands of words long. There’s little point in doing all that work now, since implementation is impossible. But it’s important to lay down the marker that good policy is possible and to show, generally speaking, what it would look like.

By the time Europe is willing to consider good policy its position will be far worse and digging out of the hole (when in a hole, stop digging) will be far harder. The most likely outcome is that Europe returns to being what it has been for most of history: a backwards peninsula on the edge of Eurasia, largely meaningless to anyone but themselves.

The world is changing, in huge ways, bigger than any changes since the industrial revolution, most likely even bigger than those. Europe is no longer the world’s leader, nor is it any longer the favored vassal of a super-power. It can adapt or see an end to the European garden.

So for it is choosing to see an end to the “garden.”

So be it.


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25 Comments

  1. European prosperity was based on being able to sell advanced tech to less-developed country
    ——
    And they were able to do this by destroying other countries industry, and robbing their natural resources and labor.
    An economic culture based on that combined with a failure to see that they’ve fallen to second rate status isn’t one that’s likely to be reviving anytime soon. That economic culture is more likely to try to cannibalize other countries (such as what the EU did with southern Europe) or go around waging wars such as in Ukraine, Syria, and Libya.

    —-
    To put it in market terms, they’re actually going to have to compete again

    What most of your proposals share is that they are things the old Left would argue for.
    Europe’s decline became unequivocal, prevalent and widespread after the fall of the USSR. The irony of free market followers not understanding the implications of an end to external competition with the USSR, and internal competition with the communist left is revealing about how much they didn’t believe their own ideology.

  2. Daniel Lynch

    Ian said “I didn’t play politics well or understand the sheer cupidity of management. “

    Ha ha, yeah that’s the story of my life, and not just in the workplace. Because I try to think logically and I try to do good, or at least do no harm, I assume other people are also logical and also want to do good, and that blinds me to reality, and it has bit me in the ass time after time after time.

    A lot of people are basically insecure and focused on maintaining or increasing their security & power. The Iron Law of Institutions, applied to individuals as well as organization. They are not interested in doing the logical and ethical thing if it threatens their security & power. They would rather be secure, in control, and miserable than relinquish control and be more successful and happy.

    Ian said ““We don’t care how you achieve the following environmental or workplace safety metrics.

    As a former safety / regulatory compliance person for both big and small companies, I mostly disagree. For starters, accidents and environmental problems are already hugely under-reported. There is unspoken pressure on employees not to report problems. If you report a problem, you are put on the shit list and your future at the company will be dim. Everyone knows that. So instead, employees hope and pray that OSHA & the EPA will take the initiative and force companies to do the right things. In reality, we in the U.S. have the worst of both worlds — reporting problems is discouraged, but OSHA & the EPA are paper tigers who won’t do anything until someone dies, if even then.

    I’m not saying I agree with all regulations. Some regs are just plain stupid and need to be changed, but there is no good process to change them.

  3. Ian Welsh

    Good point Daniel. Is there a way around it. Perhaps an anonymous complaint/accident reporting system run by the government?

  4. Daniel Lynch

    Another comment on “We don’t care how you achieve the following environmental or workplace safety metrics.” When you focus on results, rather than on the process, people will lie about the results. I.e., quality control in a manufacturing operation. I’ve seen workers enter only good test results into their SPC charts, and omit failed test results. When management looked at the SPC chart, it seemed that quality was fine, but in reality there were frequent quality problems going unreported, and those quality problems never got fixed because management was not made aware of them.

    I seem to remember Ian mentioning that the USSR economic system failed in part because operations were ordered to meet certain numbers but they simply fudged the numbers, or something to that effect. Hence quality guru Edward Deming’s rule to “eliminate management by numbers.”

  5. Ian Welsh

    Daniel,

    that’s why you need a good auditing corp. If I were in charge of a country, my first act would be to create one and put my best person in charge.

  6. Jan Wiklund

    Everything (well, almost) is possible if there are serious interests pushing for it. Most of these points have interested parties already but there is a limit for what one-issue movements can do. Reform movements are judged serious only if they are all-round and consider most of what is crucual. So this list is a good beginning, and should really have a full article added to each point, to gain more support.

    A year ago I called for comprehensive program from a Swedish audience (a translation into English here: http://www.folkrorelser.org/inenglish/programmes.html). The political crisis in Sweden has gone so far that you ca see the first generalized movement mobilization since the 1970s. It would need a program of this kind.

    The really good thing about it is that it is breaking out of the old leftist patterns and appeals to a very big audience. Probably even some capitalists.

  7. Feral Finster

    [oppressed minority] please.

    All of these solutions would have the effect of devolving power from those who presently hold it to those who do not.

    Therefore, none of it will be allowed to happen.

    Daniel Lynch nails it thusly:

    “A lot of people are basically insecure and focused on maintaining or increasing their security & power. The Iron Law of Institutions, applied to individuals as well as organization. They are not interested in doing the logical and ethical thing if it threatens their security & power. They would rather be secure, in control, and miserable than relinquish control and be more successful and happy.”

  8. “When a measure becomes a target, it ceases to be a good measure” —Charles Goodhart

    People lying and the system rewarding lying and punishing truth tellers isn’t the only reason this occurs. Obsession with a measurement creates tunnel vision that can cause disastrous effects. There are countless countries that have become so obsessed with reducing inflation that they ignore how their actions crash their productive economy.
    During 2020 Covid-19 infection became a primary targeted measurement. The subsequent tunnel vision caused use of antibiotics to plummet because you do not treat viruses with antibiotics.
    One study found that in 2020, 83% of people who died after testing positive for Covid also had pneumonia(1).

    (1)
    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10172968/

  9. marku52

    Something else is missing–Something Aurelien has been on about in his substacks.
    like this one
    https://substack.com/@aurelien2022/p-147934180

    The total loss of competence in the governing class. Where governing now is nothing but PR and managing perceptions, not actually doing anything. (Well if you do something, you might upset someone–in fact, actuating any policy of any power will inevitably upset someone–and so its much easier just to pretend the problem isn’t there, or it really isn’t a problem, and ignore or PR it…)

    The conflict that Ian and Daniel observe would be partially resolved with actual competent administrators and regulators. The neoliberal era has systematically destroyed the competence of regulators, and denigrated even the reason for their existence. While at the same time removing judgement from regulators (because honor, honesty, and a sense of service are meaningless in the “It’s all about me” era). And then replaced this with endless regulation and redtape, requiring more and more administration (employment for the PMC).

    So actual competent administration and regulators would go a long way to resolving the problem that Ian and Daniel have observed, but this capacity has been destroyed.

    How to restore it would be another part of the policy to restore Europe (Or the US, for that matter)

  10. somecomputerguy

    The EU is a confederation, like the Articles of Confederation that preceded the Constitution or the Civil War Confederacy, and suffers from the same too-weak central government (If the South had won, the very first thing it would have done would have been break apart into it’s components, which then would have commenced fighting each other).

    But really it looks like the single biggest obstacle to your advice is the European Central Bank. But it seems to me that this is also an opportunity.
    If you could remake ECB into anything you needed, give the combined powers of the Federal Reserve and U.S. Treasury under one roof, it would make a giant portion of this stuff actually possible.
    Could the five alarm disaster that is the Euro, actually become an asset?

  11. Willy

    It looks like it all comes down to eliminating concentrations of greed power gone societally destructive.

    People seem to get confused by the idea that lesser evil is better than greater evil. It should be just that simple. Maybe the confusion happens when greater evil knows it’s greater evil and camouflages itself as lesser evil just so they can get away with increasing amounts of shit?

    Every single point is about some economic or political plausibility being pushed to destructive excess, just because it may have been economically or politically plausible at one time.

  12. Jan Wiklund

    PS. It may be, theoretically, that Europe must have their own defence establishment – but I wouldn’t trust them with that more than I would trust the US. In the present Ukraine conflict, Europe is more warmongering than the US – see https://michael-von-der-schulenburg.com/with-its-role-in-the-ukraine-war-the-european-union-may-risk-its-own-political-future/ – and in the present Gaza war they are quite as. It is not US that has outlawed pro-Palestinian remarks, it is France and Germany. And they would likely dominate a European military.

  13. The Heretic

    Government should live up to the ideal of government of people, by the people, for the people… (people meaning the 95%).

    At minimum, a government for the people, must act with agency and ruthless determination on behalf of and for the benefit of the 95%, or it must enable the various groups of ordinary people, be able to engage in negotiation with the upper 5% from a position of superior negotiation power… this forcing the elites and their followers to serve the people and not the other way around.,

    The government must also speak for and protect that which has no voice, the truly marginalized (like homeless, severely mentally ill, the impoverished, the orphans, the unborn generations to come), AND the needs of the natural world (both the living and inanimate parts)…
    Thus the government must cultivate an ethic of stewardship, wisdom, broad minded perspective, and compassion, to inculcate it within itself, and to try to help create conditions and cultural background by which most of the ordinary people can freely and willingly adopt it. I am a believer that good living conditions earned honestly, with a sense of security and community in the present and future, causes most ordinary people to adopt a position of benevolence… where as only the strongly good and courageous people can adopt a position of benevolence in times of distress, scarcity or fear, and we must accept that these persons perhaps makeup no more than 10% of humanity.. (based on Victor Frankl’s statement about his observations in the Nazi death camps).

  14. different clue

    It sounds almost like a ” New Deal for Europe”. If the general situation got so bad in Europe that a commanding majority of Europeans in each European country admitted that it was ” so bad” and roughly agreed on why it was ” so bad”, perhaps some various political-cultural concern-loads of people could organize themselves into long-term durable political movements strong enough to support political parties all moving in various ways towards a “New Deal” parth towards a “New Deal” outcome.

    I hope a commanding majority of Europeans can do this. They could make Europe into a hopeful “better example” that many Americans had considered Canada to be in order to try convincing their fellow Americans to try a “Canadian method” here. CanadaCare for example, at its best and highest.

    It would also require the abolition of Forcey-FreeTrade-ism as a ruling ideology and the semi-self-sealing-off of Europe into a semi-Autarchic huge ” Domestic Economy” joining the countries of the European Cultural Area in jointly pursuing a New Deal for Europe.

  15. mago

    How long has this been going on/going on?
    Looking for solutions/revolutions?
    Ask your ma/ask your pa/ooh wah ooh wah
    What’s the sound of one hand clapping?
    Echoes in the sound of silence.
    Which is to say all we are are echoes on the wind.
    Somewhere over the rainbow on the good ship lollipop birds fly free and troubles melt like lemon drops.
    That’s as serious as I can be at the moment, misquoted lyrics from the past.
    Sheesh. Drop the hammer, change the world.
    We would if we could.

  16. GrimJim

    I have failed to remember in what book I found the quote, it might have been Geary’s “Before France and Germany” or maybe Lot’s “The End of the Ancient World and the Beginning of the Middle Ages,” or some similar volume.

    To paraphrase, it was a mention of some late migration period piece where a traveler, speaking with a Gallo-Roman Lord at his villa, was discussing the sorry state of Burgundy, and how the sad, barbaric place had fallen into a shambles of penury and savagery. The old Lord, who had lived through much of the collapse, stated something to the effect of, “Really? Well, I’ve never noticed.”

    Because of course, he and the other elite had built their own little realms, where their opulent lifestyles continued, protected by their barbarian foederati against the immiserated commons (reduced to serfdom or slavery) and other barbarians.

    So it shall be, too, in Europe, the US, and elsewhere. Until, just like those nobles of old, a generation or two down the line their mercenary servants realize their masters are no longer needed, cut off their heads, and take their daughters as wives or concubines…

    So why would the elite care if their land is ruled well or not? They will, as they always have, come through it all with more wealth and power. For the commons have forgotten the power of the tumbril and guillotine.

  17. Jan Wiklund

    somecomputerguy Aug 22:

    Europe IS a confederation, at most. Or rather, it is an arena where the member states fight for their priorities. It is nowhere like a union, there is no European citizenry, no European public debate, no European language. Only a European elite political class, and see where it has brought us!

    Wolfgang Streeck, the eminent political analyst and ex-chief of Max Planck Institute, thinks it is impossible to make it different, the differences are to great, the best we can hope for is an arena where European countries try to hammer out reasonable compromises. See https://wolfgangstreeck.com/2024/07/19/the-eu-at-war-after-two-years/.

    Nevertheless, it would be possible to break out of the US stranglehold since European priorities are not US priorities, and since US priorities are counter to European interests (we have no interest in a new iron curtain, for example, and definitely no interest in a clash with China). But I think the best is to aim for European countries, individually, as neutral, middle-sized polities, somewhat like e.g. Iran or Brazil, who navigate around the big powers.

  18. somecomputerguy

    Question phrased as an assertion; if you reformed a single institution, the European Central Bank, 90% of Ian’s suggestions would become possible, and likely, immediately.

    The Euro was intended to destroy the European welfare state by taking fiscal policy away form national governments.

    Could something intended to be an anchor around the neck, become a lifeboat?

  19. StewartM

    Fix Universities and Colleges

    Agreed with most of this. I would add I would have most significant R&D done by private companies (where secrecy is a need) or by government research labs (where everything will be published in the public domain). I would limit the R&D done by universities to being just “satellite centers” for the government R&D labs (i.e., small, more manageable, less complex, chunks of an R&D project could be sent to be done at a university, just like private companies will sometimes outsource routine testing to contract labs). That way, graduate students could then engage in ‘research’, however, in a role more suited to their limited skill sets and knowledge.

    I think this would markedly improve science, as the most difficult parts would be done by those with true expertise rather than inexperienced grad school students, just chosen because they were unpaid labor.

    Reduce the Cost Structure

    Agreed with most of your reforms, but as long as you have a capitalist class driving the economy it’s a never-ending battle. Maybe having other groups (workers, consumers) in charge requires less of a battle, as their interests coincide better with the larger society’s?

    Lastly, on regulations…

    I see some naysayers to your recommendations. I’m more accepting. Let me give two examples, both regarding medical issues.

    a) My dentist once remarked that ‘You have a lot of hard-to-clean spots in your teeth, gums, maybe we should aim at doing 3-4 cleanings a year”. I went to the insurance company about paying for it, and they declined, citing the ‘recommendation’ of two cleanings per yer. Yet, if by cleaning my teeth 3 or 4 times a year resulted in not having fillings, root canals, or crowns done, it’s a money-saver.

    b) I have S-I joint dysfunction issues, and have had for decades. With the proper therapy, it’s manageable and indeed I was able to do things like run marathons and half-marathons and do 100-mile bike events despite it. But sometimes it flares up.

    To get therapy, I have to first go to a doctor, get a referral, then go to the PT. The PT is limited on how many times he/she can see me and then I’m almost automatically discharged (that’s under Medicare, mind you). Sometimes I’ve been improving but aren’t quite there yet, then I got discharged, only to get worse, then I have to repeat the process again.

    Why not, for an established existing condition, just bypass the physician referral process. And why not, for a chronic condition, like for teeth cleaning, allow me and the PT to have regularly scheduled checkups?

    These are being limited by the insurance, yet they’re actually the cheaper and more sensible alternatives.

  20. Jan Wiklund

    Mariana Mazzucato et al, https://academic.oup.com/cje/article/47/3/507/7160981, have a list of policies that can be used to curb rentierism, and not least suggest what they should have in common.

  21. Jorge

    @Jan WIklund, thank you.

    Personnel is policy. It is possible that one driver for rentierism is the availability of trained financiers. We drove a generation of STEM people into finance partly because it was the best way to pay off student loans. If we had fewer MBAs managing companies, would we have less (or less effective) rent-seeking?

    In other words, you get the economy you staff. If we switch back to a mostly free high education system, would we get the range of trained young people we will need?

  22. Altandmain

    Ian, I think that you have underestimated how much of Europe’s prosperity was based on colonialism and neocolonialism.

    Before WW2, that was basically the European nations going around the world, killing a lot of people and stealing their natural resources. Today that’s based on the IMF and World Bank. That powered the European industrial revolution.

    A Europe that forgives debt will inevitably be one that has to pay fair market prices for any resources from the Global South, not one that can loot the rest of the world. That’s going to mean loss of competitiveness.

    The other issue you haven’t addressed is why should Russia and China help Europe? The European governments literally just tried to participate in the looting and Balkanization of Russia by proxy in Ukraine. China too has less incentive to cooperate.

    What can Europe offer to those 2 in return? I know how Europe can annoy China, with tariffs, as China would like to export, but I don’t see as much reason for them to help Europe out. Especially when Europe is trying to compete for global manufacturing market share from China and participated with the US in a long term regime change attempt against China.

    It’s going to take a collapse – something like a USSR like breakdown of the EU. It won’t solve everything, such as Europe’s natural resources problems, but it will discredit the existing regimes.

  23. Ian Welsh

    Russia’s been very clear that they’re still willing to sell resources to Europe if sanctions stopping them are removed, though they won’t keep reserves in the West.

    China still needs to export, and an impoverished Europe is not in their interest if European hostility ceases.

    The developing world is eventually going to repudiate a lot of Western debt, imo, especially the “debt” owed to France to pay for the “improvements” they made while colonial masters, so Europe may as well get ahead of it and get credit.

  24. CBBB

    No action on an independent foreign policy for Europe can be done until the economy is reformed to rely significantly less on exports and foreign demand. As you say, you need exports to pay for imports but the current economic model in European countries such as Germany, Switzerland, Austria, etc. goes far beyond that and uses exports, not simply as a way to pay for needed imports, but as the primary growth and employment engine using beggar-thy-neighbour type policies to maintain permanent trade surpluses.

    Ultimatley the main final consumer is the USA and so because much of Europe is heavily (and increasingly) reliant on US consumer demand it will always remain at the mercy of the US. China is not interested in being Europe’s trade deficit partner and so simply trying to diversify away from the US won’t work. As you say Europe needs to end austerity before it can do anything else, it needs to shift away for the export-oriented model to a domestic consumer-demand driven model, the overly large manufacturing sectors in places like Germany must shrink somewhat and consumer services need to be allow to grow.

    Only with a self-sustaining economy based on domestic demand can Europe even being to think about foreign policy independence.

  25. Wadangala Kaladoota

    After so many centuries of bleeding the coloured peoples of the world dry for their own unearned benefit, Europeans deserve to suffer again

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