Peter Drucker on The New World Economy

Continental Drift
by D.D. Guttenplan


Print this article
E-mail this article
Write to the editors
Take Action Now!
T o an American, Europe is a cautionary tale. From Jefferson's warning that when we "get piled upon one another in large cities, as in Europe, we shall be as corrupt as Europe" to Madison's explanation that separation of church and state was the only way to avoid "the ceaseless strife that has soaked the soil of Europe with blood for centuries," the Founding Fathers used the Continent to signify everything our new nation was not. A century later the Gilded Age's yearning for cultural validation complicated matters, requiring a Henry James or an Edith Wharton to do justice to the shifting balance of social insecurity, moral superiority, confidence and naïveté. But even the most starry-eyed grand tourist knew they were traveling backwards in time. Well into the last century, Europe was the "old world," a fading catalogue of postcard views and primitive plumbing where Americans came to lose their innocence.

Europe today is an economic power, the largest internal market in history, whose Benetton-clad, Prada-shod citizens scarf Alpen Bars on the way to work, fill up their German, French and Italian cars with BP, Shell and Elf, read books published by Pearson/Penguin and Bertelsmann, and chat endlessly on Finnish-made Nokia phones over the British-owned Vodafone network. As do increasing numbers of Americans, mostly without noticing it. Such icons of everyday American life as Dunkin' Donuts, Bazooka gum, Dr Pepper, Brooks Brothers, Jiffy Lube and Household Finance are also now European owned. As are Jeeps (made by Germany's DaimlerChrysler) and even Baby Ruth bars! When my family and I moved from Brooklyn to London ten years ago, the standard of living was at least as high as in the United States--and that was just in Britain. On the Continent the trains not only ran on time but were faster, more frequent and far better appointed than anything on Amtrak's rails. Today, even in poorer countries like Greece and the Czech Republic, cell phones are ubiquitous, childcare is state-subsidized and supermarket and bookstore shelves alike are near occasions of sin. Fly from JFK to Milan, or Baltimore to Bilbao, and you are in little doubt which way the money goes.

This refusal of forced choices is, I would argue, the real source of Europe's radical promise. Increasingly Americans are told we must choose: Social Security or economic prosperity, job growth or workers' rights, Homeland Security or civil liberties. The right in America is well aware of the threat. Listen to Walter Russell Mead trying to console himself: "given Europe's low birth rates, the rise of an alienated, mostly Muslim, disaffected population seems inevitable." Notice the caricature, on Fox and talk-radio, of a continent of anti-Semitic cheese-eating surrender monkeys. Or the use of "European" as an epithet in the presidential election. And notice, too, how attentive the Hoover Institution has suddenly become to Western Europe. Likewise the American Enterprise Institute, which launched a New Atlantic Initiative, chaired by Radek Sikorski (married to Anne Applebaum), and whose patrons include José María Aznar, Henry Kissinger, Margaret Thatcher and Vaclav Havel.

Militarily weak, institutionally clumsy and with its own internal contradictions--over immigration, religious diversity and how best to respond to the pressure of multinational corporations--Europe offers not a paradise, or even a dream, but a thriving alternative to the American Way. Neoliberals who cast labor unions as enemies of prosperity have to explain why jobs have grown faster in Ireland, Denmark and the Netherlands--all countries where workers enjoy the full European menu of workers' rights--than in the United States.

While America has been distracted by the war on terror, authoritarian Beijing has been spreading its influence through east Asia and beyond. In fact, for the first time since the fall of the Soviet Union, US "soft power" is being challenged by a state which is capable of wielding comparable economic and cultural clout

And yet, across Asia, and not only in authoritarian nations like Laos but also in free societies and supposedly close friends of America, I have watched China win praise and awe previously reserved for the US. In 2000, Jiang made his first visit to Cambodia, a country that only a decade ago opposed China for its past support of the Khmer Rouge. Over 200,000 cheering schoolchildren welcomed Jiang's motorcade. In early 2004, the Thai prime minister Thaksin Shinawatra announced that he was overhauling foreign policy: the long-time US and British ally would now make China (and India) "the most important countries for Thailand's diplomacy." In 2004, China signed 24 new economic and political agreements with Burma, and it has invested so much in Mongolia that it is almost a Chinese satellite. India, which once fought a bloody border war with China, has established trade and security ties with Beijing. Russia has signed a treaty of friendship. Even South Korea, where US troops are stationed, now looks to China to broker a deal on North Korea's nuclear weapons programme.

America must continue to call China what it is and do whatever small things it can to help ordinary Chinese to change their government. As China expert Ross Terrill notes: "There is no way the US can please Beijing." As long as the Chinese Communist party remains in power, the two states' political systems will be mutually incompatible. But unless Washington wakes up soon, many more countries will be doing their best to please Beijing.

THE FINANCIAL PAGE

IN YUAN WE TRUST

Issue of 2005-04-18
Posted 2005-04-11

In the 2004 Hollywood comedy "EuroTrip," which chronicles the adventures of a group of American teen-agers on a debased modern version of the Grand Tour, our heroes end up trapped in Bratislava with a mere $1.83 in their pockets. Things look bleak, until they discover just what a dollar and change will buy: a luxury suite, massages, three-course meals with champagne, and assiduously servile service. Feeling flush, they toss their waiter a five-cent tip. He turns to his boss and says, "A nickel! You see this? I quit! I open my own hotel."

If only. Nowadays, when you're abroad, you're lucky if $1.83 buys you a cup of coffee. In the past three years, the value of the dollar has fallen by more than fifty per cent against the euro and twenty-five per cent against the yen, and, a recent rally notwithstanding, most analysts say that the dollar is only going to get weaker in the months to come. Europeans now routinely fly across the Atlantic to go shopping, and they have also started to nose around in the American real-estate market. You know the dollar's in trouble when our puffed-up real estate starts looking cheap.