14 November 2018

Will things in Europe have to get worse before they can get better?


The historian Arnold Toynbee characterised civilisation as “a movement and not a condition, a voyage and not a harbour.” By necessity, civilisations are curious, forward- and outward-looking, and animated by the belief that their best days are still ahead of them.

Seen through that prism, Europe is in trouble. According to a new report by the Economist Intelligence Unit (EIU), almost half of Germans and Swedes (47 and 44 per cent, respectively) believe that things will take a turn for the worse over the coming decade – compared to 69 per cent of Koreans who expect things to improve. According to the same poll, only 22 per cent of Europeans said they were happy with how their country was being run. And, according to a different poll conducted by the Bertelsmann Foundation, fully two thirds of Europeans believe the present is worse than the past.

The disenchantment is understandable in Italy, where per capita incomes are at the same level as at the end of the 1990s. There, over three quarters of respondents, including 64 per cent of young people, reported that “things were better before”. The sense of impending doom is harder to explain in Germany, by any account a successful and well-governed country, where 61 per cent nonetheless share the same pessimistic outlook – or in Poland, which has seen an extraordinary amount of economic and social progress since 1989 and where nevertheless three fifths of the population harbour a nostalgia for the past.

While partly a reflection of the underlying reality including the lingering economic damage inflicted by the economic crisis in the Eurozone and the mismanagement of the refugee crisis of 2015, the problem lies primarily in the world of ideas – specifically in the collective aspirations of European societies, or the lack thereof. The solution to Europe’s malaise, too, must be driven by ideas. If it comes at all, it will come from intellectual and political entrepreneurs whose imagination extends beyond the horizon of today’s political and partisan constraints.

On a recent podcast with Tyler Cowen, Portugal’s former Europe Minister Bruno Maçães complained about the lack of a sense of adventure in Western political thought. In particular, contemporary liberalism, he argues, is pervaded by the sense that it provides all relevant political answers. All that is needed is for social reality to conform to its prescriptions.

To be sure, democratic capitalism and the rule of law vastly outperform their alternatives on any conceivable margin. But that general observation, grounded in historic data, does not necessarily provide guidance to policymakers at the present time. Furthermore, getting preachy about the virtues of the status quo hardly helps when public trust in the current system is eroding.

Alas, becoming preachy is precisely what much of the political centre across Europe (and beyond) is doing in response to the ongoing populist backlash. In Toynbee’s view, downfalls of civilisations tend to come from a “dominant minority” – so complacent and enamoured with its past achievements that it stifles political change at a time when such an adjustment is necessary.

If policies put forward by most of Europe’s centre-left and centre-right political parties were politically sustainable, it would likely lead to a managed decline, with ever-rising burdens of public debt and pre-emptive overregulation closing off large sways of the economy to innovation. Unwilling to invest in hard power, Europe’s hope is that the rest of the world will leave the continent alone.

Liberal democracies offer a way out of Toynbee’s trap because their political arenas are open to peaceful disruption, contestation and change. That does not mean that one should cheer the populist reaction to the status quo coming from the extreme right and the extreme left. If given a try, protectionist and isolationist policies peddled by populist charlatans would only amplify Europe’s current woes. Europe’s politics need a particular kind of disruptor: armed with sound ideas and capable of making the increasingly demoralised populations excited about what is possible.

In practical terms, Europe needs an economic liberalisation that would enable it to leverage its large internal market to generate innovation and economic growth. It needs a settlement on its openness to immigration, an economic governance for the Eurozone that is both seen as legitimate and does not produce systemic instability. It needs ruthlessness and strategic thinking to keep the continent safe and free.

Those are all hard feats to pull off, both intellectually and politically. There is nothing automatic or inevitable about the political renewal of Europe and of the West more generally. It will require the right ideas, leadership, and moment in time. More importantly, it will require a new collective narrative reflecting either a shared external enemy or an unfulfilled ambition – such as landing a person on the moon, to use a historic example.

Somehow, agreeing on a common external threat seems like the easier route – especially if Russia and China overreach in their revisionism in the coming years. But that might also mean that things will have to get worse for the continent before they start turning for the better.

Dalibor Rohac is a research fellow at the American Enterprise Institute in Washington DC.