Despite fears of the euro’s future amidst Greece’s economic collapse, author Steven Hill of the New America Foundation argues the United States still has much to learn from Europe’s social and economic policies. We speak to Hill about his new book, Europe’s Promise: Why the European Way Is the Best Hope for an Insecure Age. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
JUAN GONZALEZ: We turn now to Europe, where the economic crisis in Greece has raised fears about the future of the euro. On Thursday, the European Union reportedly approved a deal to help rescue Greece from its debt problems. The European leaders made no promises of aid and emphasized that Greece must cut its budget deficit by four percent this year. Greece’s deficit is at 12.7 percent, more than four times higher than eurozone rules allow.
But the Greek government’s cost-cutting proposals have met with significant domestic resistance. A national public sector strike Wednesday brought services to a halt, and unions said the austerity measures amounted to a war against workers.
AMY GOODMAN: Well, our next guest thinks some of the gloom in Brussels and Athens might be misplaced and argues that the United States still has much to learn from Europe’s social and economic policies. Steven Hill is the author of Europe’s Promise: Why the European Way Is the Best Hope for an Insecure Age. He directs the Political Reform Program at the New America Foundation. His previous books include 10 Steps to Repair American Democracy and Fixing Elections: The Failure of America’s Winner-Take-All Politics. Steven Hill joins us now from Washington, DC.
Welcome to Democracy Now! First talk about the crisis in Greece and Europe’s response.
STEVEN HILL: Well, the crisis there is — the world has gone through a huge economic shock, and we’re seeing, and are going to continue to see, various aftershocks that we’re seeing not only in places like Greece, but we’ve seen in California, where I actually live, where you had a state that is 14 percent of the GDP of the United States that also was threatening to default and ended up having to issue IOUs in order to pay its debts. And so, these are the sorts of things that are occurring in Europe, as well.
What’s different in Europe is that, in the United States we’re used to the federal government being a backstop for states, for example, whereas in Europe there’s really not a tradition of any other states, like Germany and France, which are the stronger partners in the European Union, being a backstop for a country like Greece. And so, that’s what a lot of the back-and-forth discussion that we’re seeing right now, a lot of the anxiety. But just recently, it looks like France and Germany have in fact agreed to be sort of a financial backstop. And as a result, the markets have calmed, and order has returned, so to speak.
But what’s being lost here, of course, is what happens to people when these sorts of things happen. And just like we’re seeing in California, layoffs, furloughs. The city of Los Angeles just laid off a thousand people. This is the type of thing that is going to affect Greece to some extent.
But I think it’s also important to keep a broader perspective about this. Greece is only two percent of Europe’s economy. Europe itself only has a deficit-to-GDP ratio of about six percent, compared to the United States, which has a deficit-to-GDP ratio of ten-and-a-half percent, and California, which is 14 percent of the American economy. So there’s analogies here that go on both sides of the Atlantic.
JUAN GONZALEZ: Well, in your book, you posit that most Americans are not really aware of the enormous change in direction capitalism has taken in Europe since World War II. You actually say at one point, “The European Union is an entirely new species of human organization, the likes of which the world has never seen. It marks a new evolutionary stage in supranational development in the way it links and closely integrates entire regions of nation-states economically and politically.” How does this work now in this particular situation of the Greek crisis? And what do you think is the most important lesson that Americans must learn about how the European Union is dealing with its economic crises?
STEVEN HILL: Well, I mean, for example, while Greece is going through this deficit issue, the people there all still have healthcare. You know, Greece has universal healthcare for all, unlike in the United States or California, where you have millions of people that have no healthcare at all. They have a much more generous support for workers who get laid off. They have paid parental leave, paid sick leave. They have more generous retirement, more vacations. And, you know, whereas Americans, when we go through this, really don’t have any of that at all. And that’s still present in Greece and in other countries of Europe throughout any kind of crisis like this. They start trimming a little bit at the edges, but even so, what remains is still far more than what any American would enjoy.
But the thing that’s important to realize is that these sorts of things have been portrayed as something that undermines the European economy vis-à-vis the American economy. But, in fact, when you really look at the numbers, there’s no truth to it whatsoever. Europe has the largest economy in the world. It’s almost a third of the world’s economy. In fact, it’s almost as large as the United States and China’s economy combined. Europe has more Fortune 500 companies than China and the United States combined. It has more small businesses, that produce two-thirds of the jobs, compared to in the United States where small business produces about only half the jobs. And so, however you want to measure it, the European economy is robust, and it’s vibrant.
But what Europe has managed to do is to figure out how do we harness this ability of capitalism to create wealth, because there’s no question that capitalism creates a lot of wealth, but there’s an outstanding question here of what do we do with that wealth. Whose pockets does that money go into? Europe has figured out a way to harness this wealth and create a more broadly shared prosperity that all of their people enjoy, and even in the midst of an economic crisis like this, whereas the United States, we’re still trying to figure it out. We can’t even figure out how to give healthcare to all our people or to get sixty votes in the United States Senate, you know, where the filibuster has gone wild. So, in many, many ways, Europe is doing fine through this crisis, where we in the United States here are really having difficult times.
JUAN GONZALEZ: One of the things you also raise is the — how Europe decided after World War II basically not to demilitarize, but to certainly reduce its expenditures on armies and on weapons, and this has enabled it to be able to provide a better life for its citizens. Could you talk about that to some extent?
STEVEN HILL: Certainly. Europe was a military — a place of military warring nations for centuries. And after the utter destruction of World Wars I and II, the politicians of Europe — interestingly, the conservative politicians of Europe, people like Konrad Adenauer from Germany and Winston Churchill from the UK — they decided that it was time to quit pouring their nations’ wealth into the military machines they had been and to start pouring it into their people. So a movement emerged for what was called then the “social market economy” — in my book, I call it “social capitalism” — to start taking the resources of their free markets and plowing it back into developing their people, giving things like, for example, free or nearly free university education, which Europe still has today, whereas, you know, in the United States students are paying increasingly amount for tuition. Having childcare, in the United States, childcare for two children is about $12,000 per year for a family in the United States. In Europe, you’re paying a thousand to maybe $2,000 per year for that same childcare. And so, Europe plowed it back into these things in order to develop these things for their people.
And they also did other things that I think is of great interest that many people in the United States have not heard about. In order to, in a sense, put some regulations around corporate power, Germany was the first to develop a practice known as co-determination, where the — you know, every corporation has a board of directors, but in Germany 50 percent of those board members are elected by the workers. In Sweden a third of the board members are elected by the workers. It would be as if Wal-Mart were required by law to allow its workers to elect 50 percent of its board of directors. It’s almost unimaginable from the American point of view. And yet, here you have major economies in Europe that actually do this on a fairly regular basis, and yet most Americans have never even heard about this.
AMY GOODMAN: Steven Hill, can you explain who the PIGS are?
STEVEN HILL: The PIGS are the name that’s being given to — it’s an acronym for Portugal, Italy or Ireland, depending on who’s using it, Greece and Spain. And this is the feeling — the group that they’ve put together of countries that they feel may default on the loans that they have in order to fund their budget deficits. You know, it’s — certainly, whenever you have the big budget deficits that these countries have run up — but I should mention that the United States has run up a budget deficit almost as large. Our deficit-to-GDP ration in the United States is 10.5 percent, compared to 12.7 percent in Greece. Not that much different. But still, it’s of concern.
Yet I think it’s being a bit overblown, because as long — what’s new here is that France and Germany and the other countries that are more healthy economically are being asked to be backstops for their fellow nations in the eurozone that are not doing as well. But again, this is something that, in the United States, the federal government does for states here all the time already. It’s really a matter of what does Europe do, going forward. And what Europe is saying, with the recent news, is that the better-off countries are going to agree to be that backstop for what’s being called the PIGS, such as Greece and Portugal and others.
JUAN GONZALEZ: And when you say “backstop,” what would that support entail?
STEVEN HILL: Well, it’s not clear in the case of Europe, because they haven’t released any details. But it could mean loans from the better-off countries to the other countries that aren’t doing so well, just as, for example, the state of California is a state that, for decades, has — for every dollar in federal money it gives to Washington, DC, it only receives back about 80 cents on the dollar. Same with the state of Illinois, for every dollar it gives to the federal government, it only receives back about 80 cents on the dollar, whereas other states in the United States — states like Mississippi, Alabama, Alaska, for example — they’re getting way more than a dollar from the federal government for every dollar they give. And so, whenever you have a union of any sort, there is a sense that we’re in this together, and so the better-off help with the ones who aren’t as well off.
But that’s a new concept for Europe. I mean, we have to keep in mind that the European Union only came into force in 1992 with the Maastricht Treaty, and the full European Union twenty-seven nations only came into origin in 2004. So, compared to the United States, this is a rather new political entity. If you look back at America’s history, it took about eighty or more years, from its time — our nation’s founding in 1790, when the first government formed, it took about eighty years for the country to really congeal in any way to really say it wasn’t just a collection of regions. And by that standard, Europe is actually ahead of the game.
And I think generally what’s going on in Europe is going to turn out to be a positive, because it’s going to make their union somewhat more tighter, and it’s also — there’s some silver linings here, where it’s going to cause the euro to drop a little bit, which will be good for exporting nations like Germany and France. And for nations like the United States, which will make our dollar comparatively stronger, it’s going to actually make our exports a little bit more difficult to Europe. So there’s really pros and cons whenever you have a situation like this, depending on what side you’re standing on.
AMY GOODMAN: Steven Hill, I was very interested in your last chapter, “Will Europe Survive?” on “The Challenges of Immigration,” “A European Civil Rights Movement Aris[ing] — Sort Of” and “The Dilemma of Population Decline: ‘Where are all the children?’”
STEVEN HILL: Right. Well, these are the big challenges of Europe. Both immigration as well as — it’s a handful of countries; it’s not all countries in Europe. Predominantly Germany, Italy and Spain, where you see population decline. But other countries like France, Britain, Ireland, Sweden and others are actually at what they call replacement level, where they’re not really declining.
But in terms of integration, the conclusion, briefly, that I came up with is that Europe doesn’t have an immigration problem. In fact, it needs a certain degree of immigration. What Europe has is an integration problem, and that you have there not just immigrants, but several generations of North Africans and Middle Easterners and others who have not been integrated very well. But I think it’s also fair to say that Europe has been at this integration game for a lot less time than, for example, we have here in the United States. And so, it’s taking time for them to recognize that they have a problem. They’re now at the point where I think they recognize they have the problem, and they’re mounting interventions. They’re spending hundreds of billions of euros for various integration programs, you know, language classes, programs geared to help underserved communities to get the services they need, programs to help them develop economically. It’s a work in progress. A lot of people have their crystal balls out trying to figure out what’s going to happen. And I think it’s fair to say that nobody really knows, but, you know, I think Europe realizes that it has to take this more seriously than it has, and it’s moving forward with it.
JUAN GONZALEZ: And quickly, one question, the rise of Europe, as you point out, provides an alternative to the American form of capital – the US form of capitalism. But you also talk about the rise of the G20 as a new force, important force, in world economic policy versus the old G8 or G7. Could you talk about that?
STEVEN HILL: Sure. I mean, the world, in the post-World War II period, was of course dominated by the UN Security Council, and then that sort of became the G7, which were the wealthiest countries in the world, and the G7 included a few European countries, the United States, Russia, China and others. And so, now the G20 is expanding this. And it just makes sense. We’re living more in a multi-polar world. Even Secretary of Defense Robert Gates has acknowledged that. And it makes sense to bring more people to the table to start talking about how to coordinate economic and political and environmental policies.
I mean, one of the ways in which Europe has really — is really leading the way is on its use of environmental technologies, green technologies, green design, conservation technologies and renewable technologies, that are being implemented in a much more widespread fashion in Europe, to the point where they’ve lowered their ecological footprint, as it’s called, to half that of the United States, even though they have the same standard of living. I think the average American uses twice as much carbon, twice as much electricity as your average European, and over four times as much carbon as someone from China or India.
And so, these are the — really the challenges that face the world today, is how do we integrate the other countries of the world that haven’t enjoyed in the wealth and prosperity — and many of them in the G20 — and how do we allow the Chinas and the Indias and the Brazils to rise up in the world without burning up the planet in the process? And that’s where, you know, I think the European way, as I call it in my book, really offers a model for how to do this, because both the way it has robust economies, it’s figured out how to take that wealth and make it a broadly shared distribution, and do it all in a way that’s as environmentally sustainable as possible. These are the types of things that all countries in the world need to do, looking forward, including the United States, where we’re foot-dragging on so many of these areas. And I think Europe is really showing the way.
AMY GOODMAN: Steven Hill, we want to thank you very much for being with us. He directs the Political Reform Program at the New America Foundation. His latest book is called Europe’s Promise: Why the European Way Is the Best Hope for an Insecure Age.