The American Enterprise

Europe's not working: the continent's major economies have fallen asleep. And there's not much hope this will change soon.

BERLIN -- They call themselves "The Happy Unemployed," and they fight "the dictatorship of wage dependency"--at a very leisurely pace.

This German group so far consists of a few amateur humorists, and seems unlikely to grow larger. For while there is persistent mass unemployment in many European countries--with jobless rates hovering near double-digit levels in Germany, France, and other parts of the continent for most of a decade now--it's unlikely that many Europeans enjoy being unemployed. Like other people, most Europeans strive for the benefits that come with being a member of the work force: financial independence, a feeling of usefulness, self-confidence, and respect from fellow citizens.

Europeans who are unable to get work find the experience as stressful as Americans do. A German government report describes the personal afflictions that have sprung up amidst the country's economic stagnation: "Depressive moods, general dissatisfaction with life, fear, helplessness and hopelessness, low self-esteem, resignation bordering on apathy, a low level of activity, social isolation, and loneliness."

The inescapable reality is that the economies of the major countries on the European continent are basket cases: They produce the unemployed by the millions. Even more frightening, European economies are creating a new kind of stratified society, in which a substantial and growing minority is shut out from the labor market permanently through absurdly high minimum-wage requirements and overly strict regulations (like the employment protection laws that can make it almost impossible to fire people).

The syndrome has not blighted all European countries equally--parts of Eastern Europe, and some Western European countries, are healthier than the norm. But in the three countries with the largest economies--France, Germany, and Italy--stagnation, joblessness, and low or no growth are now facts of life. Together, these Big Three countries account for about three fifths of the Euro Zone's economic output, and they are not healthy--and haven't been for years.

Help on the way? Hold your cheers

Some help may be on its way. About the time this magazine reaches readers, it is likely that mid-September elections in Germany will have swept out Gerhard Schroeder's Social Democrats and brought in a more reform-minded government. Meanwhile, handicappers suggest that when France's damaged Jacques Chirac leaves office (perhaps as early as the spring of 2007), the man most likely to succeed him is Nicolas Sarkozy--a man who is in at least some ways more supportive of free-market reform than any recent major French politician.

And across the Channel, recently re-elected British prime minister Tony Blair has made it his mission to open an economic debate across Europe. By adopting economic policies much closer to America's than to those of France and Germany, Britain has thrived over the last decade. The U.K.'s unemployment rate is half the continent's, its growth has been almost twice the level of the Euro Zone, poverty is declining in Britain, and business creativity is rising. …

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