The Future of Europe: Reform or Decline

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A provocative argument that unless Europe takes serious action soon, its economic and political decline is unavoidable, and a clear statement of the steps Europe must take before it's too late.

Unless Europe takes action soon, its further economic and political decline is almost inevitable, economists Alberto Alesina and Francesco Giavazzi write in this provocative book. Without comprehensive reform, continental Western Europe's overprotected, overregulated economies will continue to slow—and its political influence will become negligible. This doesn't mean that Italy, Germany, France, and other now-prosperous countries will become poor; their standard of living will remain comfortable. But they will become largely irrelevant on the world scene. In The Future of Europe, Alesina and Giavazzi (themselves Europeans) outline the steps that Europe must take to prevent its economic and political eclipse.

Europe, the authors say, has much to learn from the market liberalism of America. Europeans work less and vacation more than Americans; they value job stability and security above all. Americans, Alesina and Giavazzi argue, work harder and longer and are more willing to endure the ups and downs of a market economy. Europeans prize their welfare states; Americans abhor government spending. America is a melting pot; European countries—witness the November 2005 unrest in France—have trouble absorbing their immigrant populations. If Europe is to arrest its decline, Alesina and Giavazzi warn, it needs to adopt something closer to the American free-market model for dealing with these issues.

Alesina and Giavazzi's prescriptions for how Europe should handle worker productivity, labor market regulation, globalization, support for higher education and technology research, fiscal policy, and its multiethnic societies are sure to stir controversy, as will their eye-opening view of the European Union and the euro. But their wake-up call will ring loud and clear for anyone concerned about the future of Europe and the global economy.


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The authours argue that Europeans should work harder and longer hours to avoid economic decline. This view is obsolete in 2018. Today we talk about creating slow-growth economic zones in Europe as an alternative to the unsustainable free-market economy.

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From what is happening now (Euro debt crisis), we can say that this book's prediction is ... true. The Europe is trapped in the political swamp as described in the book. How stupid we are: we know what's wrong, but don't have the gut to reform. Well, it's not an academic book, but I still hope to see more data in the next revision.  


Two Different Social Models
2 Handling a Multiethnic Society
3 Americans at Work Europeans on Holiday
4 Job Security Job Regulations and 14 Million Unemployed
5 Technology Research and Universities
6 Competition Innovation and the Myth of National Champions
7 Interest Groups against Liberalization
8 The Judicial System and the Cost of Doing Business
9 Conflicts of Interest in Financial Markets
10 A United Europe?
11 The Rhetoric of Dirigisme and Coordination
12 The Euro
13 Budget Fixes
14 A Wakeup Call for Europeans

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Page 17 - AUBURN (HW) (Ed.). Comparative Banking in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, USA, USSR London: Waterlow, 1960. 9".
Page 17 - Original source: Authors' calculations based on data from OECD Economic Outlook Database (no. 71, vol. 2002, release 01, June 2002).

About the author (2008)

Alberto Alesina is Nathaniel Ropes Professor of Political Economics at Harvard University. He is the coauthor (with Enrico Spolaore) of The Size of Nations (MIT Press, 2003).

Francesco Giavazzi is Professor of Economics at Bocconi University and Visiting Professor at MIT. He is the coauthor (with Alberto Giovannini) of Limiting Exchange Rate Flexibility: The European Monetary System (MIT Press, 1989).

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