According to this article in The Financial Times, a recent study finds that the EU economy is currently at the position the US economy was in the late 1970's. The report also presented some startling economic numbers that place the EU in a very deep hole that might be hard dig out of. First, it would take the EU until 2056 to reach the current US worker productivity rate. Secondly, at the current rate of spending it would take the EU until 2123 to match the current US expenditure rate on R&D.
While some in Europe's decrepit welfare states might see this study as good news, they need to rethink. Just look at Germany's 12.5% un-employment rate to see what awaits the rest of Europe. The welfare states in Europe are about in the same as the US because they've followed the same economic models that Jimmy Carter and Walter Mondale champion. Whether it was extensive taxes on individuals & corporations, high interest rates, extensive regulation, soft money policy as well as a highly restrictive trade policy. If everybody old enough to remember, the US economy was in dire straits during this time. What, with an 2.5% economic growth rate, median income below $37,868, 7.6% un-employment, 0.6% productivity rate, as well as an inflation rate near 14%, the Carter White House clearly demonstrates what awaits the EU. I just hope they have another Ronald Reagan or Margaret Thatcher waiting in the wings to take control over the ship or their headed for rocky shores. If the can find someone who can liberalize the EU economy by introducing free-trade, low tax rates (Three cheers to Eastern Europe), tighter monetary policies, deregulation policies like these two paragon's of power, they will enjoy a great future. The proof is in the pudding when you look at President Reagan's numbers. Compare this to Carter, when President Reagan left office the growth rate was 3.2%(This occurred during a recession at that), Median Income reached some $42,049, 5.5% un-employment rate, 1.5% productivity rate, as well as an inflation rate of 4.1%. (Discover more in The Cato Institute's Policy Analysis: Supply Tax Cuts and the Truth About the Reagan Economic Record)
Unless the EU adopts such policies to enact an economic rebirth like the one that occurred under Reagan, the EU will continue to fall into a deeper morass. Even the researchers of the study, Eurochambres, have raised such concern. Just look at what Christoph Leitl, president of Eurochambres, said about the situation:
“We urge European leaders at the summit [later this month] to focus on the economy because without the economy, Europe does not have a future. It's a question of survival.”Maybe the Eurocrats should listen to these people.
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