Europe’s Industrial Rollback

One of Europe’s ailments is the persistent belief that government can engineer prosperity. You would think that the past five years of crisis had brought them to abandon that belief, or at least that the poor GDP growth of the past two decades would make them question the role of government. But no. Instead of rethinking their government-based approach to every problem, the Eurocracy is doubling down on statism. This story from EUBusiness.com is a good example:

The European Trade Union Confederation (ETUC) and IndustriAll European Trade Union welcome the adoption by the European Parliament of the report Reindustrialising Europe to Promote Competitiveness and Sustainability. “This report underlines the importance of a strong industry to support lasting and quality jobs in Europe,” said Jozef Niemiec, ETUC Deputy General Secretary.

Listen to this – it is the sound of mashed potatoes:

“Encouraging the reindustrialisation of Europe through the mobilisation of adequate financial means and through support for innovation is essential for Europe to get out of the crisis”.

Now, if there was no role for government in Mr. Niemiec’s vision, he would not be talking about it. What he is after is, of course, to have government – ostensibly the European Commission – “mobilize” the “adequate financial means” to help “reindustrialize” Europe. Again, it is fairly easy to see what that means for regular Europeans: higher taxes. The same goes for his call for “support for innovation”.

It is interesting, though, to note that there is now growing concern in Europe about the continent’s de-industrialization. Technically the term refers to a systemic loss of manufacturing jobs, either in absolute terms or in relative terms. Relatively speaking, manufacturing has been losing ground in Europe and North America over the past four decades, which is in good part due to the long-term growth of the service sector. However, during the Great Recession, the European Union (counted as the 27-country block) has lost more than 440,000 manufacturing jobs from 2008 to 2012, a 4.4-percent decline from the 10.1 million jobs in ’08.

During the same time period, the United States lost eleven percent of its 13.4 million manufacturing jobs. However, while preliminary quarterly data indicates that the European decline continues, the U.S. manufacturing sector is on a slow but visible rebound: since October 2010 U.S. manufacturers have had more employees every month than the same month a year earlier.

The difference? Less government involvement and a more flexible labor market here in the United States.

But as we return to the EUBusiness.com story, we are once again reminded that the role of government is practically never questioned in Europe:

The report is based on a comprehensive vision of industrial policy and also addresses related issues of relevancy such as training and skills of the workforce. It also strongly acknowledges the importance of industrial democracy. “There is no credible industrial policy if workers are not taken into account, that’s why it is so important to promote training and worker’s participation through social dialogue” said Ulrich Eckelmann, IndustriAll General Secretary.

And it gets better:

The report also stresses the importance of common social and environmental norms to frame the development of international trade. It also deplores the absence of action by the European Commission to tackle restructuring, or social and wage dumping in Europe.

In other words, the European Commission should throw out the remaining pieces of the free market in Europe and bet everything it has on government. So called “wage dumping” is nothing more than a decline in wages due to an excessive supply of labor. That excessive supply, in turn, is caused by high and still rising unemployment: in the third quarter of 2013 the EU-27 had a total unemployment rate of 10.9 percent, 0.4 percentage points higher than the same quarter in 2012 and 1.2 percentage points higher than the third quarter of 2011.

This rise in unemployment is happening while government has never been more involved in running economic policy in Europe. From out-of-control money supply to the tax choke hold on private businesses to top-down imposed, harmful austerity measures, the European economy is under siege by government. So long as that siege remains, the continent’s de-industrialization will continue. Other sectors will not have the thrust to pull Europe up from its decline into industrial poverty.

The only things that will continue to grow in Europe are government and the economic wasteland it is trying to live off.