The Europeanization of America

From The SkyFor her first overseas trip as secretary of state, Hillary Clinton went to Asia. For his first trip, John Kerry chose Europe. His choice is partly a result of his strong connections across the Atlantic, partly a move against frustrations U.S. diplomats have faced in places like Beijing. John Kerry’s choice also speaks to a remarkable narrowing of the Atlantic, which culminated in Barack Obama’s championing of a transatlantic free-trade agreement in his State of Union address this month. Only 10 years ago, Europe and U.S. were meant to be so different that not only did they have different views, they viewed each other as if from different planets. Politically and militarily, the author Robert Kagan claimed, the Americans were from Mars and Europeans from Venus. American commentators used to routinely denounce European economies for being closed, backward-looking and missing the wave of future. Germany was still seen as the sick man of Europe, it was subject of ridicule for the way it was wedded to an industrial economy in a post-industrial age. What a difference a decade can make. As a European in Washington, I have spent much of past few weeks listening to pillars of American foreign policy and economic establishments. I am struck by how many of today’s U.S. debates mirror those in Europe. These two giant economies are no longer as different as they once were. In foreign policy, security fields, no one seems to be coming from Mars anymore. The U.S. is debating how to avoid war and how to save money. Everyone agrees that, whether or not there is a sequester, there will be deep cuts in the Pentagon’s budget, with tens of thousands of soldiers and marines facing decommission. On Friday, seminar at Brookings Institution, which gathered soldiers, senators and academics, seemed to agree future administrations should not call on armed forces to intervene directly in other countries’ civil wars, to build democracy and engage in lengthy peacekeeping operations. As Michelle Flornoy, former Pentagon official who many people want in the sidelines behind Defense Secretary-nominee Chuck Hagel, said, “We don’t want to be world’s policemen.” In the place of major ground wars, participants said they want to rely on drones, alliances, rapidly conducted offshore interventions. Where Clinton and Bush administrations were apostles of a flat world of financial – technological globalization, Obama administration has a more nuanced position. While Obama does not advocate protectionism, he worries trade with China has de-industrialized the American economy, hollowed out middle-class jobs and depressed wages. As a result, administration officials are talking about energy independence, re-industrialization, re-shoring and fair trade. Where once the U.S. saw Germany as being trapped in auto parts and metal bashing at a time when high-tech services were the future, people in D.C. now talk about a German economy with reverence. J. Robinson West, who advises most of big energy companies as head of PFC Energy, predicts the U.S. will be producing more energy than Saudi Arabia and Russia within two decades. But the Obama administration seems less excited about energy exports than the promise cheap gas could lead to a manufacturing revival. The Administration seems receptive to arguments put forth by Dow Chemical’s president, Andrew Liveris, that being cautious about granting export licenses could help create jobs in the US. Obama thinks a manufacturing revival is key element of enhancing America’s ability to innovate, whether it is a chance to develop patents, innovations in production or create higher-wage technical jobs. Above all, Obama, influenced by the German example, thinks advanced manufacturing can create export-led growth (…..)

Link: http://blogs.reuters.com/mark-leonard/2013/02/25/the-europeanization-of-america/

Acerca de ignaciocovelo
Consultor Internacional

2 Responses to The Europeanization of America

  1. Why do European countries have lower levels of poverty and inequality than the United States? We used to think this was a result of American anti-government sentiment, which produced a government too small to redistribute income or to attend to the needs of the poor. But over the past three decades scholars have discovered that our government wasn’t as small as we thought. Historians, sociologists and political scientists have all uncovered evidence that points to a surprisingly large governmental presence in the United States throughout the 20th century and even earlier, in some cases surpassing what we find in Western Europe. For example, European banks did not have to contend with regulations separating commercial and investment banking, as American banks did under the Glass-Steagall Act of 1933. Until the 1980s taxes on capital income were higher in the United States than in most European countries, where taxes on labor were and still are higher. American bankruptcy law has been harder on creditors and easier on debtors than any of the countries of Europe, even after bankruptcy reform here in 2005. Or consider the famous case of the thalidomide babies in the late 1950s and early 1960s. Thalidomide was a drug given to pregnant women for nausea. It caused devastating birth defects, from stunted limbs to spina bifida, and many babies died. Thalidomide was widely available in Europe and produced thousands of cases of birth defects there. But the Food and Drug Administration kept thalidomide off the American market, successfully using aggressive governmental intervention to protect children from a pharmaceutical company with a dangerous product. They would be in their early 50s now, those babies saved by the F.D.A. I wonder sometimes how many of them are walking around today complaining about big government. But if Europe has been so favorable to business, how did it end up with lower poverty and inequality rates? To understand this, we have to let go of the idea that governments are the opposite of markets, or that welfare spending kills capitalist production. European countries do have larger public welfare states, and this brings down their poverty and inequality rates. But in return, European corporations received a gift: a political economy biased against consumption and geared toward production. Beginning after World War II, Germany, France and several other countries aimed to restrain private consumption and channel profits toward export industries, in a bid to reconstruct their war-devastated economies. Loose regulation was part of this business-friendly strategy. Some scholars have even called these European policies “supply side,” in that they focused on incentives for producers, at the expense of demand-side measures that would benefit consumers. They were one ingredient in Europe’s spectacular postwar growth (…..)

    http://opinionator.blogs.nytimes.com/2013/03/02/land-of-plenty-of-government/

  2. Professor Uziel Nogueira says: Dr. Prasad, congratulations. A well reasoned piece to explain a complex economic and social phenomena. Regarding the question posed at the beginning. Why do European countries have lower levels of poverty and inequality than the United States? You point out that scholars used to think this was a result of American anti-government sentiment, which produced a government too small to redistribute income or to attend to the needs of the poor. The evidence shows otherwise as described in the article. Now, the conclusion that poverty reduction is about strategies like promoting saving over borrowing and consumption. It is economically sound but not sufficient to explain the difference between the European and American performance. We have to include politics into the picture, your area of expertise. The political system is used either to preserve wealth and maintain privileges of the elite 1% crowd or to distribute wealth and improve opportunities for the 99% majority. The European political system did a better job than the US in the last few decades. Perhaps, the integration process played a big role in explaining poverty reduction of inequality in Europe.


    The fact of the matter is the US political system became stacked against the poor and middle class during the last few decades. The questions are: Why did it happen? Why does the land of opportunity for all became the land of opportunity for a few? Why does the US became Latin America?

    http://opinionator.blogs.nytimes.com/2013/03/02/land-of-plenty-of-government/

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