Hoover Daily Report

The Political Economy of Anti-Americanism

Thursday, December 2, 2004

Major foreign policy differences, especially regarding the wars in Afghanistan and Iraq, have contributed to the deterioration of relationships between the United States and our traditional allies in Western Europe. There can be no doubt that some European leaders stonewalled the Bush administration on Iraq in order to provide lateral support to the Kerry campaign. With the Bush victory, however, Europe may choose the wiser path of mending fences with Washington.

Yet an anti-American spirit has been unleashed in the European street, and it will be difficult to tame, not only because of foreign policy but also because of economics. Poor economic performance in Europe feeds a politics of resentment, and the scapegoat has been the United States.

In 2000, the European Union (EU) launched the ambitious Lisbon process, a reform agenda enabling the EU to become "the most competitive and dynamic, knowledge-based economy in the world, capable of sustainable economic growth, creating more and better jobs and greater social cohesion" by the year 2010. Lisbon was also a declaration of competition with the United States for global economic primacy. A high-level commission headed by former Dutch prime minister Wim Koks recently determined, however, that European economic performance was deeply disappointing. The gap with the United States has been growing larger, and the Lisbon goals are further away than ever.

Third-quarter growth in the United States was reported at 3.7 percent, a figure eliciting disappointment because it was lower than some had expected. Compare this, however, with the euro economies, where growth in 2004 may only reach 1.8 percent and is predicted to climb at most to a breathtaking 1.9 percent in 2005. Why is growth so slow? The Koks report blames politicians for failing to carry out necessary reforms.

The inability to reform—in the labor market, in impediments to trade, and in the social welfare network—is precisely where the problem of anti-Americanism enters. Efforts to deregulate and liberalize the economy are easily tagged with negative labels: French pundits denounce them as "Anglo-Saxon"; German politicians shun them as the feared "American conditions." Although Europe urgently needs structural reform, it hides behind the smoke screen of anti-Americanism, which is really anticapitalism. Rejecting America because of capitalism, however, means repressing the European tradition of free market thinkers from Adam Smith to Friedrich von Hayek.

Many Europeans believe that their slow economy is the price they must pay for their elaborate welfare state. This, however, turns out to be an illusion. A recent study by the Austrian Labor Council shows that the portion of GDP devoted to the social safety net is greater in the United States than it is in Europe; although European states generously pay out more in welfare benefits, they take much more back through higher tax rates.

At the end of the day, anti-Americanism as a block to economic reform inhibits European prosperity. The more Europeans demonstrate, the farther they fall behind. Good-bye to Lisbon.