European Stagnation

Excellent piece by Luis Garicano, Bengt Holmström & Nicolas Petit.

The continent faces two options. By the middle of this century, it could follow the path of Argentina: its enormous prosperity a distant memory; its welfare states bankrupt and its pensions unpayable; its politics stuck between extremes that mortgage the future to save themselves in the present; and its brightest gone for opportunities elsewhere. In fact, it would have an even worse hand than Argentina, as it has enemies keen to carve it up by force and a population that would be older than Argentina’s is today.

Or it could return to the dynamics of the trente glorieuses. Rather than aspire to be a museum-cum-retirement home, happy to leave the technological frontier to other countries, Europe could be the engine of a new industrial revolution. Europe was at the cutting edge of innovation in the lifetime of most Europeans alive today. It could again be a continent of builders, traders and inventors who seek opportunity in the world’s second largest market.

The European Union does not need a new treaty or powers. It just needs a single-minded focus on one goal: economic prosperity.

I’ve quoted the call to arms but there is much more substantive and deep analysis. Naturally, I approve of this theme “If a product is safe enough to be sold in Lisbon, it should be safe enough for Berlin.” Not the usual fare, read the whole thing.