How Europe Goes Wrong

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Tyler continues to baffle me. Now he's deeply misstating the free-market case against European social democracy:

Market-oriented types look at Europe and think it is on the verge of collapse, when it isn't. They can't imagine that it doesn't, in every way, have American-style government failure.

I can't think of any smart market-oriented person who claims that Europe is "on the verge of collapse." What market-oriented people do claim is that Europe has pig-headedly regulated its labor markets into shockingly high unemployment, and its economy into low growth.

Market-oriented people add that the few ways in which Europe does look better than the U.S. on paper are largely arithmetic: They don't admit many poor immigrants, which trivially raises averages.

For the basic facts on Europe's deficiencies, see fellow Templeton Prize winner Olaf Gersemann's Cowboy Capitalism. Europe is not doomed; it's just a big disappointment. And contrary to Tyler, market-oriented types who think otherwise are very rare.

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The author at Economic Investigations in a related article titled News of the World #30 writes:

Though some may reach for the stars Others will end behind bars What the future has in store no one ever knows before Yet we would all like the right to find the key to success That elusive ray of light that will lead to happiness Flax tax extravaganz... [Tracked on April 7, 2007 1:33 PM]

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Mr. Econotarian writes:

Moreover, not allowing in poor immigrants now ignores the long-term benefits of immigration later.

Would the U.S. be the vibrant economy it is today if we had kept out poor Irish, Germans, and Eastern European immigrants during the 1800's?

Posted April 4, 2007 11:19 AM

David writes:

"They can't imagine that it doesn't, in every way, have American-style government failure."

He is technically right...Europe doesn't have American-style failure, but instead has European-style failure, which is much worse in the long run.

Posted April 4, 2007 11:28 AM

Grumpy European writes:

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Posted April 4, 2007 11:31 AM

Nathan Smith writes:

Mark Steyn is one "market-oriented person" who seems to think Europe is on the verge of collapse. Although probably he doesn't: humorous exaggeration is part of Steyn's shtick. But not every reader gets that. Steyn's a lot of fun, but in this case he does a disservice to other conservatives by supplying a straw man to Europhiles like Newsweek and, to a much lesser extent, Tyler Cowen.

Europeans do sometimes seem to think Europe is on the verge of collapse. Who was it who said "Europe is not in crisis, it's in deep crisis?" In that case, Europe means EU-rope. But a lot of the chattering/bureaucrat classes over there (who seem not to be as distinct there as here, unfortunately) seem to have forgotten the difference. I think it's the strange ideology of European unification, and the reaction against it, that fuel the hope-for-tomorrow/verge-of-collapse schizophrenia that tends to mask what is, at bottom, a boring story of persistent relative decline.

Posted April 4, 2007 12:50 PM

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