Friday, October 30, 2015

The Degeneration of Europe

There is a paradox at the heart of the new “V√∂lkerwanderung,” the mass movement into Europe of people from all over North Africa, the Middle East and South Asia. From the outside Europe looks alluringly beautiful. But from the inside it is ugly, like one of those grand old Prussian or Polish manor houses that were turned into shabby workers’ sanitoriums under the communists.

The great migration of 2015 makes it clear that the European Union (EU) is an attractive destination for hundreds of thousands, and probably millions of people. It is so attractive that since January this year, 2,600 people have died crossing the Mediterranean trying to enter the EU. Yet, viewed from the inside, Europe looks a mess. The European economy seems much closer to “secular stagnation”—in Larry Summers’s phrase—than the United States economy. European politics is also in disarray. In almost every member state there is at least one populist party, and nearly all of them are deeply hostile to immigration.

No doubt, many forms of euroscepticism are unpleasant. But that is not to say that euroscepticism is all unwarranted. (...)

What does this mean in the great historical scheme of things? Europe is not quite stagnating, but it is certainly not growing dynamically. It is failing to create jobs, and it is failing especially to create jobs for young people and for immigrants. Seen in a broad historical perspective, this suggests that the great shift from the west to the rest is continuing apace. As I argued in my book Civilization: the West and the Rest, this is the biggest economic change the world has seen in 500 years.

If, 500 years ago, you had gone on a world tour, you would not have been especially struck by western Europe compared with some of the other great civilisations you could have visited. It would not have been obvious to a traveller that over the next five centuries there would be a huge divergence in living standards between Europe and the rest of the world. Five hundred years ago, Ming China was in many ways the most sophisticated civilisation in the world. It certainly had some of the biggest cities. Nanjing or Beijing, for example, were far larger than Paris or London. Between the 1600s and the 1970s, a great divergence occurred that saw living standards, on almost any conceivable measure, improve dramatically in western Europe and in places where western Europeans settled in large numbers, notably North America, relative to living standards in China and the rest of the world. This great divergence is the most striking feature of modern history.

The great empires that emerged from Europe together dominated the world’s political landscape (and seascape) as well as its economy. They may have accounted for a minority of the world’s population, but those European empires controlled a huge proportion of the rest of the world’s people.

In our lifetime, however, the great divergence stopped and went into reverse. Back in the late 1970s, when the People’s Republic of China first began to reintroduce market forces into the planned economy, its GDP was a small percentage of the world’s total: around 2 per cent. But last year China’s GDP (adjusted for differences in domestic purchasing power) exceeded that of the United States at more than 16 per cent of total global output.

What has driven this shift? One answer to that question is a good news story, the other a not-so-good news story. The good news is that China and other countries have adopted the things that after 1500 made Europe so successful. First, was the idea of competition in economic as well as in political life. Second, the notion of science that underpinned the scientific revolution of the 17th and 18th centuries. Third, was the notion of the rule of law based on private property rights. Fourth, modern medicine, the branch of the scientific revolution that doubled and then more than doubled life expectancy. Fifth, was the consumer society, and sixth, the work ethic.

Part of what we are seeing today is the belated adoption by the rest of the world of ideas and institutions that worked really well for Europe and the west. That is a cause for celebration. It can only be good news that increasing numbers of Asians and now Africans, too, are leaving poverty behind and discovering the benefits of these western institutions and ideas. They still have a long way to go (think about the lack of rule of law in China today, to give just one example), but they have covered an astonishing distance since the 1970s.

The bad news is that even as the rest of the world is getting better institutionally, we in Europe and the west appear to be getting worse. We are suffering from a strange institutional degeneration. This has four aspects.

by Niall Ferguson, Prospect |  Read more:
Image: REUTERS/Marko Djurica