Matt Ridley warns that even as economic conditions improve around the world, Europe faces serious prospects of decline. Excerpt:
Even so, relative decline can be painful. Spanish people are richer and live longer than when their silver-sated conquistador ancestors strutted the European stage, but I am sure it does not feel like it to an unemployed youth in Bilbao. Whatever happens, we Europeans will probably have to get used to watching Asians book the best restaurants and launch the biggest aircraft carriers in the years ahead.
Absolute decline is far more scary. If Europe cannot rediscover how to grow its economy, then it will have to default on its vast debts, either directly or by inflation. Either way savers will be poorer, tax receipts will be lower and spending on schools and hospitals and roads will be lower: genuine austerity.
As the MP Douglas Carswell reminds us in his book The End of Politics, here in Britain we have public and private debts that are five times our annual economic output; we are spending £46 out of every £100 we earn to buy government – a product that, unlike most, delivers less output for more cost each year. As the Ming empire found out, the more government you buy, the less economic activity you get. A Fujian travelling salesman in 1400 was enmeshed in such a tangled bureaucracy that he could neither travel nor sell without bribes and permits, and he had to submit a monthly inventory of his stocks to the emperor.
Sound familiar? Every small businessman I talk to these days has a horror story to tell about the delays and costs that have been visited upon him by planners, inspectors, officials and consultees. Using the excuse of “cuts”, the bureaucracy is taking even longer to make decisions than five years ago. In the time it has taken Britain’s Government to decide whether to allow a fifth exploratory shale gas well to be drilled in Lancashire, and from the same standing start, the same investors have drilled 72 producing wells in Argentina. That the country of Watt and Stephenson should look a potential cheap-energy gift horse in the mouth in this way is staggering to this jaded optimist.
UPDATE: Some of you are having trouble linking directly to the Ridley piece. Try going to the main page of Ridley’s blog, and going from there to the “Global outlook rosy; Europe’s outlook grim” post.