Is Europe’s Model Better Than America’s Shock Capitalism?

The global financial and economic meltdown of 2008, which originated in the United States, was a perfect opportunity for Americans to seriously reconsider their conception of “free market”, and put into question America’s own brand of “wild” capitalism, where the cycles of economic boom and bust always end up making the wealthy-few richer, and the vast majority of Americans poorer.

Illustration By Ben Heine

Unfortunately, this much needed debate never really took place, as Wall Street recovered all the critical systemic issues were quickly brushed under the proverbial rug. The Obama administration and the political class at large, both Democrats and Republicans, never seized the opportunity to start the necessary debate on America’s socio-economic model and its obvious failures.

Today, one of the key man responsible for this epic economic collapse, Alan Greenspan, was on Capitol Hill answering questions from lawmakers. Greenspan, who headed the Feds for close to twenty years starting in 1987, was still in denial about his gross lack of vision, his incredible misunderstandings, and even what should be called a lack of basic intelligence. Greenspan still found arguments to defend sub-prime lending, which, as we know, amounted to nothing less than a giant Ponzi scheme orchestrated by the financiers of Wall Street. The former Federal Reserve Chairman conceded that he was “right 70 percent of the time, and only wrong 30 percent”. Greenspan was perhaps right 70 percent of the time for his friends of Wall Street, but for ordinary Americans he was wrong 100 percent of the time.

Illustration By Mr. Drinkwater

While the overwhelming majority of the big US media outlets, mostly controlled by large corporate conglomerates, have done nothing to start the debate on America’s socio-economic development model, a few islands of sanity have emerged in this sea of ignorance and irrationality.

One of them is Steven Hill. Steven Hill is a political writer and program director at the New America Foundation. His new book is “Europe’s Promise: Why The European Way Is The Best Hope In An Insecure Age”, and it is a must read.

In his book, Steven Hill argues that Europe has a better development model than America for the 21st Century. The author explains Europe’s new vision since World War II, shatters myths, and shows how Europe’s leadership manifests itself in several major areas; economic strength, with Europe now the world’s wealthiest trading block, producing nearly a third of the world’s economy, almost as large as the US and China combined; arguably the best health care and other social supports for families and individuals; widespread use of renewable energy technologies and conservation; and an unmatched regional network of trade, foreign aid, and investment that link one-third of the world to the European Union’s 27 member states and nearly half billion citizens.

“A quiet revolution has been occurring in post-World War II Europe. A world power has emerged across the Atlantic that is re-crafting the rules of how a modern society should provide economic security, environmental sustainability, and global stability,” wrote Steven Hill.

To read an excerpt of Steven Hill’s book click here.

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20 Responses to Is Europe’s Model Better Than America’s Shock Capitalism?

  1. E-commerce Solutions April 8, 2010 at 2:39 am

    I really wish free-market Libertarians would fully understand what their “ideal” system looks like. Without government, we are powerless against corporations, monopolies, and monied interests.

    • Ole Ole Olson April 8, 2010 at 6:48 am

      Absolutely right. If there is no counterbalance there is only unbridled corporate greed. This leads to a serf/master society.

    • SissyFingers April 8, 2010 at 6:07 pm

      Correct me if I’m wrong, but corporations are only in existence due to the charters they receive from the government allowing them to be so, are they not?

    • The Dude April 8, 2010 at 6:36 pm

      The right amount of government intervention is necessary; too little or too much is disastrous. The problem is that no one knows what the right amount is, and that major change is almost always implemented as a knee-jerk reaction. Yes, a gigantic debacle was created by a bunch of greedy corporate misfits who completely ignored basic lending fundamentals. Why not let the market punish them? I am not claiming allegiance to any one ideal, but it seems like the best way to spread the message that we are indeed powerless against corporations, monopolies, etc… is to bail their stupid butts out of their self-made predicament and let them go on about their business.

  2. Maria Odete Madeira April 8, 2010 at 8:07 am

    “(…) Greenspan, who headed the Feds for close to twenty years starting in 1987, was still in denial about his gross lack of vision, his incredible misunderstandings, and even what should be called a lack of basic intelligence (…)”

    Not sure if it was a “lack of vision”, “misunderstandings” and “lack of basic intelligence” or if it was, instead, a political option and a power option exercised towards what constitutes the basic strategic line of the radical market neoliberalism.

    “ (…) Greenspan was perhaps right 70 percent of the time for his friends of Wall Street, but for ordinary Americans he was wrong 100 percent of the time.”

    Not only for ordinary Americans…, the option for the market neoliberalism is globalized as a form of financial capitalism, and the Fed’s decisions affect the financial networks…, errors spread and expand the risk, that is the cost of an interconnected world. An evaluation of political, economic and financial mistakes cannot be done correctly without a perceptive exercise of the global networks.

    Global risk situations affect any country and “ordinaries” that live in it…, ordinary Americans…, “ordinaries throughout the world”. Too many “ordinaries” feeding the system? Unquestionably!

    “(…) ignorance and irrationality (…)”

    “Ignorance” and “irrationality”!? What a Christian piety!…

    …Even those that are culpable are excused by “ignorance” and “irrationality”. One can always blame it on the “animal spirits” (Keynes), “irrational exuberance” (Greenspan), “momentary lapse of reason” (Pink Floyd 😉 ), protocognition, malevolent magnets affecting the brain (bad neuroscience)…, afterwards an act of constriction (mea culpa, mea culpa, inscius (alicuius rei) sum!) with regards to the “residual mistakes”, expressed in proportions, does the trick, it is always better to be “stupid” than to be culpable.

    As for Europe, that’s a very optimistic view. Wishful thinking, better a strong and relevant Europe than China, eh!

    Maybe some to look a little more to the Aristotelian dynamis (potentia) to see what is there…

    • Gilbert Mercier
      Gilbert Mercier April 8, 2010 at 8:30 am

      Very good points, Maria. I do agree with you as far as Steve Hill’s overly optimistic views towards Europe. But again (I believe you live in Portugal) if you compare the EU to the US, which is the topic of Steve’s book and of this article, Europe still has a huge social edge on America in terms of health care, education and social justice. Unfortunately, more and more government in Europe(a typical example is Sarkozy in France) are eager to align themselves with Washington’s political views.

      • Maria Odete Madeira April 8, 2010 at 9:20 am

        Yes, I’m very Portuguese in Portugal, thank you :-).

        Without question, EU, or at least some of its members, are better than the US in terms of health care, however, also in the EU there are great problems, in particular, with the sustainability of the welfare state and the discrepancies between what are goals of economic growth and de facto social development, not in potency.

        The sustainability of the Euro is still to be seen.

        There is another matter that must be considered, the EU cannot be compared to the US, the EU is comprised of a network of countries with their own culture, language, nationality, history, roots, irreducible formative initial conditions that determine each country’s development in its differences, or formative gaps, and that make Europe to be Europe in its own strange loop,… there is an agreement in negotiating a common path, not subsumed in a United States of Europe. European people are first and foremost citizens of their own country.

        • ann faerber April 8, 2010 at 11:26 am

          Well, I really do think we are talking about general comparisons of two societies, and both DO have separate ideas, at the end of the work day, on what a standard of living looks like. I think it’s a good article because it points us in a basic direction of what could be the qualities of a fairer society than the absurd defunct American dream model the entire world looks to (besides Europeans, Canadians, and Australians).

  3. John Hasselberg April 8, 2010 at 11:17 am

    I strongly recommend reading “The European Dream: How Europe’s Vision of the Future Is Quietly Eclipsing the American Dream”, a book, by Jeremy Rifkin published in September 2004.

    • ann faerber April 8, 2010 at 11:30 am

      Hey professor Hassleberg… is that you? I will look into this book. Sounds good!

  4. ann faerber April 8, 2010 at 11:18 am

    YES! The unfortunate thing about the European model: The world is a global market & they are eventually tied into our economic river of Hades. Therefore, they must adjust to the pulls and powers of cheap American, Chinese, manufacturing, plus our sad demise of the balancing force of a union which helps maintain jobs (yes, sometimes higher costs of products). Europeans are trying to hold on to what they value as a force behind their standard of living, i.e. sustaining the ingenuity of their workforce by sustaining higher level education & thus standards of production and product (producing products that do not fall apart & innovative technology); keeping a balance of power between employer and employee, & a decent social net via fair taxation: You get something for what you are taxed. Oh for all the Europeans that complain about your system, PLEASE do come here and soon you will see it’s about getting a clue about regulations (please.. any?) and having some respect for the workers of this country, and not just the top 1-3 percent with disturbingly obese bank accounts. Great article Gilbert!

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  6. BigAl April 8, 2010 at 6:12 pm

    “Almost as big as US and Canada”….and they can’t seem to bail out Greece with their own money. They need the IMF to step in. Spain is next? The US has 50 relatively independent states but acts as a single soverign nation. The EU is many disparate nations trying to act as one economy..and not doing very well.

    Yes, the US screwed up, but what people forget is that we had the freedom to do so, and it played out and we where hurt. Its better to make your own mistakes and learn from them, then to never have tried. Regulating the market always ends up distorting or destroying the market. What the market really needs is more transparency…it was the rating agencies that had the oppurtunity and knowledge (if not why where they doing the rating) to properly evaluate the risk. If they couldn’t do the risk analysis their admital of such would have far more revealing.

  7. Lakawak April 8, 2010 at 6:38 pm

    It MUST be nice to be an ultra left blog where no one EXPECTS intelligent thoughts. Must be very liberating to not have to try.

    Sp…the US system always leaves the rich richer and the majority poorer? Then explain to me how hte stnadard of living has steadily INCREASED quite a bit over the long term. Our poor poor middle class would be upper class in most European countries.

    • Ole Ole Olson April 8, 2010 at 8:51 pm

      That is quite simply not true. The rich are certainly far richer in the US, but the poor in Europe are more on par with the American middle class in terms of quality of life.

      • Morgaine April 10, 2010 at 7:19 pm

        yes, exactly, Ole. Having lived in the US til I was 30, a number of years in Europe, and now Australia, I can say that the vast majority of “poor” throughout the rest of the developed world are nearly as well off as the US “middle class” (which is shrinking).

        For one thing, everyone has the social welfare safety net, which is better in some societies than others but it does mean that there’s no need to end up homeless/living in your car.

        For another, no one is at risk of losing their houses/savings/retirement/whatever because of medical bills, thanks to national health care, which is not only less expensive than for profit health care, but also incorporates an enormous preventative element which helps keep people from becoming incapacitated.

        Here in Australia (and in most of Europe that I saw, except the UK), there’s no such thing as working poor. If you have a job, you make enough money to have a decent standard of living.

  8. Kevin Baker April 8, 2010 at 7:08 pm

    thanks for deleting my reasoned post on bias and objectivity. You just lost a reader newsjunkiepost.

    • Gilbert Mercier
      Gilbert Mercier April 8, 2010 at 7:42 pm

      Your previous comment was deleted for one reason only. NJP does not tolerate insults directed towards our authors (myself in this case). You suggested that “I should be fired” for writing this article. Well, if you are a reader of News Junkie Post you should know that I am this publication co-founder and co-editor in chief. With this in mind, you will certainly understand that I will not “be fired”.

  9. Sane Person April 8, 2010 at 7:36 pm

    I can pretty much tie most of the major problems in the U.S. back to government intervention. Does anyone here know how many regulations and regulators US banks are subject to? More regulations will just mean less business in the U.S. more regulators will be a waste of money. It was hedge funds that finally caught on to the sub-prime bubble caused by various democratic institutions pushing legislation forcing sub-prime loans. Why are average Americans much more wealthy than the average Europeans why do most technologies get developed in the U.S. Why is america great? America is great because we are not like Europe . . .some aspects of europe are better than the U.S. because the culture there is different, i.e. they eat healthier have better work attitudes towards blue collar jobs. The booms only make the wealthy rich? We saw a great run of house inflation, and inflation is like a progressive tax, the wealthy who have financial assets are able to buy less while the middle class whose largest asset is their house sees their networth increase. And the stock boom saw many middle class americans become wealthy! The appreciation of stock prices have allowed many middle class and lower class american retire comfortable, and we would still be the best country in the world to live in, if it wasn’t for one thing . . . .government over spending and democrat entitlement programs . . .

  10. Rick April 12, 2010 at 7:43 am

    Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

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