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October 1, 2014

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Europe’s continental drift

RIMINI, Italy -- Think we have it bad, caught between a stagnant economy and gridlocked politics? Take a trip to Europe, where the economy and politics are going not sideways but backward.

Europe’s numbers should be familiar by now, but they’re still awful. In the United States, President Barack Obama’s much-derided stimulus package helped end our recession in 2009; in Europe, with no comparable stimulus, the recession isn’t over. Unemployment in the 17 countries that share the euro is higher than 11 percent, and it’s still heading up.

Since 2008, Italy’s gross domestic product has shrunk by almost 10 percent after inflation; by some estimates, Southern Europe is experiencing its worst drop in living standards since World War II. It all makes the U.S. recovery look positively healthy, even though our 2 percent growth rate and 7.6 percent unemployment feel anemic.

On the ground, the news isn’t much better. Real estate prices have tanked. The dazzling turn-of-the-century Grand Hotel in Rimini, which Federico Fellini used in his films, is almost empty.

Spain, Portugal and Greece are even worse off; France isn’t much better. The French were shocked to learn that many of their brightest university graduates were thinking about emigrating to America, to Australia, even to Germany, Europe’s healthiest big economy. The news has helped push Parisians into an enthusiastically lugubrious debate: Are they more morose than ever, or have they always been this grumpy?

Worst of all for the French, they’re not unique. The Italians and Spanish are depressed by the depression, the British are unhappy about austerity, and the Germans are grouchy that they’re still being asked to pay for it all.

And that has turned European politics sour. In almost every country, protest movements have swelled with resentment against the bureaucrats of the European Union and against immigrants who are taking low-wage jobs. In Greece, the thugs of the Golden Dawn movement, which holds 18 seats in parliament, roam the streets beating up Africans and Arabs. In Italy, a senator from the anti-immigrant Northern League said a Congolese-born physician in the new Cabinet reminded him of an orangutan.

The good news is that the far right hasn’t taken over anywhere, not even in Greece. But its strength (and that of left-leaning protest movements too) clearly reflects voters’ impatience with the inability of traditional parties to solve problems. To most European politicians, Obama’s job-approval rating of 46 percent looks dazzling. France’s Francois Hollande is stuck at 30 percent, Britain’s David Cameron at 38 percent. (Germany, as usual, is an exception: Angela Merkel, whose voters are grateful she has protected them from their neighbors’ worst problems, is cruising toward re-election with an approval rating of 62 percent.)

Just as in Washington, most politicians in Europe actually agree on some measures that would help solve their problems; they just can’t make it happen. Leaders of most parties want countries such as France and Italy to reform their bureaucracies, which make it almost impossible to fire anyone, meaning employers won’t hire anyone either. At the same time, even Merkel knows that she needs to ease her austerity policies and that Germany needs to underwrite a new banking union to help get credit flowing.

But here’s where Europe’s brand of gridlock is even worse than ours. Merkel says she will launch a new “More Europe” banking union, in exchange for economic reforms in other countries, as soon as she’s re-elected. In Germany, as in Washington, you can enact politically risky reforms only in the brief windows that open just after an election.

But in the Eurozone, those windows are even smaller. With 28 members, somebody in the EU is always in campaign mode.

Next up in 2014 is France, which will vote for the European Parliament in May and its own Senate in September. “Hollande won’t agree to major reforms before then, and that means Merkel can’t do anything big,” French political scientist Patrick Chamorel told me.

In 2015, elections are likely in Britain and Spain. And don’t even think about Italy, where the jury-rigged coalition government that includes both the left-leaning Democrats and Silvio Berlusconi’s conservatives could fall any time.

Does all this matter? Yes. Europe’s unending recession is holding back a global recovery. And when the United States wants European allies to share its burdens, the continuing economic and political crisis gets in the way.

Meanwhile, though, a look at Europe offers Americans at least one consolation: the pleasure of schadenfreude. Yes, the food is superb, the culture is sublime and they even have health care systems that work. But when it comes to political gridlock, Europeans are just as bad off as we are — probably, worse.

Doyle McManus is a columnist for The Los Angeles Times.

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