The World Cup of Global Competition

By Steven Hill, Center for Voting and Democracy, 11 July 1998

I recently returned from a month-long research trip in various capitals of Europe, including Paris, Amsterdam, Brussels and Bonn. This op-ed is based on that trip. It is about Europe's quest for a common currency and economic union.

Sitting in a Paris café on the eve of Europe's quest for a common currency, one can't help but be struck by the miracle of it all. A continent that has fought numerous bloody wars this century, last century and every century before, is standing on the threshold of a peaceful union to promote mutual economic prosperity.

Paris is also the site this year for the World Cup of soccer. Watching Europeans of numerous nationalities patriotically cheering their home teams, one can't help but reflect on the remaining barriers to this European union. Nationalism lends a distinctive flavor to each European nation's culture and charm, and Europeans cling to it with a tenacious tribalism that can be both attractive and alarming.

Unemployment is the buzz word on most everyone's lips here these days, and it presents additional challenges to the Union. Unemployment rates hover around 10-20%, depending on the country. So the World Cup must be a welcome distraction. Much hand-wringing and introspection has accompanied economic uncertainty as the various European nations gear up for unprecedented cross-border competition and reaching the Maastricht Treaty eligibility requirements for entering the Union.

For economic inspiration, some Europeans are looking westward toward American shores. The American model is seen as one that is marked by low unemployment of 4-5%, market and labor flexibility, low deficits and increased worker productivity. The Europeans are right to strive for low unemployment, but important distinctions should be noted about U.S. practices.

First, the American version isn't just a model. The U.S. is a competitor that has the distinct advantage of a vast, relatively homogeneous market of 250 million people. If need be, workers in Michigan can relocate to jobs in New Mexico and capably fit into their new environs using the same language, the same currency, and largely the same culture. MacDonalds, AT&T and Microsoft have seen to that.

Europe's quest for the Euro currency is designed to achieve some of this advantage, but will workers from Spain be welcome in, say, Germany, or the Irish in Italy? Watching World Cup nationalism on display in European cafes, and listening to the burly choruses of patriotic anthems ringing in the streets, this seems unlikely. At least, not any time soon.

Second, in the punishing free-for-all of free trade and open markets, the American model promises with one hand, but it takes away with the other. The rate of homelessness in American cities has reached a Third World scale that Europeans can scarcely imagine. Forty million people, most of them children, are without health care. Children are the fastest growing poverty sector. Prisons are one of the fastest growing economic sectors, as relative spending on education decreases. The income ratio of the top 20% of earners to the bottom is about 10 to 1 in the U.S., comparable to Latin America's rate, and double that of Europe.

Yes, U.S. workers have jobs and comparatively high productivity—but too many of these jobs are temporary or dead-end service sector jobs. U.S. workers also have less vacation, less parental leave, less affordable daycare and work more hours per week than their European counterparts. These are not coincidences. In the U.S., they are two sides of the same coin.

In a highly competitive world, there are winners and losers, just like in the World Cup. The greater the competition, the more some get left behind. Is Old World Europe ready for the importation of these ways of New World America? Or is it a wooden shoe that doesn't fit? Can Europe carve out it's own independent course, borrowing some features from the U.S. model and leaving others? That question is what tugs greatly on the European conscience right now.

The quest for a European union and common currency can be put in its proper perspective by answering a simple question: who is to benefit? The U.S. never adequately addressed this question. The negotiated side agreements to NAFTA and GATT regarding the environment, labor, and health and safety are toothless watch dogs. The bounty of the current economic expansion has ameliorated conditions for those who are positioned to benefit, but expansions are always followed by downturns—witness hapless Asia.

When that downturn comes to American shores, the gutted social safety net—already modest by European standards—will catch relatively few, and the American people's values for compassion, pluralism and fairness will be sorely tested.

Perhaps Europe can find another way. As one wise old American, and former Ambassador to France, Benjamin Franklin, once remarked on the eve of the American revolution: We must all hang together, or most assuredly we will all hang separately. Europeans must decide who the ‘we’ is.