I think Kissinger was absolutely right in his analysis of the European problem of the last 150 years which can be summed up in the question: What do we do about Germany? I can’t believe that he worried about it during his term in office because the problem had been solved by Stalin who had chopped it in two! Now it is united once again although severely weakened by the botched job Kohl made of it.

However, the Germans are an industrious lot and over the next 20 odd years I expect them to ’get it together’ and then we will be back to the old question once again because there it will sit, big, powerful and slap bang in the middle of the continent like a bloody great cuckoo in the nest.

The Fench solution is to atempt to cuddle it to death but I suspect that as the giant begins to flex his muscles the French will imitate their national dog - the poodle! The crucial factor, it seems to me, is “the economy, stupid!” If the euro works then Germany might become bossy (as is the way with all powerful nations) but not warlike because democracies don’t make war on other democracies. However if the euro fails then all bets are off! My own opinion, which on past performance isn’t worth a spit, is that the euro will fail and lead to a dissolution of the EU with consequent anguish all round.

And just to be really gloomy, my prognosis is that one or other European states will want to secede because of the pain of the euro and attempts to force it back in will lead to the next European war.

However, reasons to be cheerful - pax Americana will be much like pax Britannica. They (the USA) will dominate the globe but not totally. The bits they do control will, on the whole, like former british colonies, be the better for the experience. The bits they don’t control will be crap! They Yanks will, like the Brits before them, blunder about and make mistakes but in the end when ’usleless idiots’ like Jean Cohen are long gone, history will look back and say that on the whole, they were ’a Good Thing’!
David Duff

Yes, look at the great ex-colonial-American success stories:

1. Liberia
2. Cuba
3. Phillipines
4. Nicaragua
5. Iraq

Sounds a lot like Niall Ferguson (Empire)’s theory though. Great book, but the last chapter (on the US as young empire) was bunk, as even Ferguson admits now. Did you read it?

I do think the US in the 21st Century risks becoming a ’German problem’; too big and strong to fit in, yet too small and weak to dominate. However, Germany was at the heart of Europe while the US is off in N. America. So sulking hemispheric isolationism is an option for the US, one that’s looking more likely by the week.
Time will tell.

I would take issue with all, and point out that US success is due to the success of its capitalist, free-market society. The more states embrace this form of socio-economic organization, the better chances they have in counteracting perceived US hegemony.

As it stands now, the EU does not seem willing to do what it takes to compete with the US, as it insists in embracing the welfare state. As long as this is so, the US will dominate over Europe.

I don’t think Kissingeresque geopolitical interpretations matter so much in an age where the nation/state is becoming increasingly irrelevant. What matters are barriers to markets, - those are our new borders. And the ones who can bring them down sooner, will be the ones who will gain predominance.

Universal generalisations in politics are usually flawed but I will hazard one here: Always beware of people who go on about “free markets” - they don’t understand what they are talking about.

I say that not because I favour piling on regulations intended to protect or promote selected vested interests or tax ’n’ spend regardless and a cradle to the grave system of state welfare - quite the contrary - but because I know that a huge structure of laws to define and protect property rights and legitimate transactions in those rights and to promote competition is necessary for markets to continue to function efficiently.

The constructive argument is not between free markets and the alternatives but as to what structures of law, regulations, taxes and social security are most conducive to general prosperity and those which are not. Of course, this agenda doesn’t yield facile slogans but then the wisdom of the world can’t be transcribed onto the back of a postage stamp just for the sake of those who can’t deal with anything more complicated.

Fact is that for better or worse all governments intervene in national economies. The questions to ask are: Why? How? And whether the forms of intervention do more harm than good?

Tax burdens, welfare systems and heathcare systems differ widely within Europe. Lumping them all together does not illuminate.

The Shorter Markku Nordstrom:

I’m not really interested in geopolitics, but I would like to ruin this thread by turning it into a stale discussion of why the welfare state sucks and free trade is good.

Did I mention that America is great country?

Bob: Free markets are the guiding principle. Getting there is another story. The problem with the European approach is an insistence on “yes, but, we are a special case. We have a cultural exception.” And then the cultural exception turns out to be a body of laws that have nothing to do with culture, and all to do with exception.

Shaken: Sorry to ruin your thread. I know that Europeans prefer the Mutual Admiration Society approach to discussion. But then there’s not much to admire in European economic achievement, given that it’s been freeloading off of the American financial engine for decades…

Mark: I’ve no trouble with free discussion, free trade, free money, free beer, free whatever.
I don’t see how your posts relate to the thread subject, however.

You seem to be more interested in preaching the cause of free markets and American superiority than in discussing facts. I haven’t heard of any US officials, or even any Americans, foaming at the mouth from furious anger at the refusal of the EU to accept GM foods. Nor did the Russians launch their nukes to retaliate against the (crime? horrible mistake?) of US steel tariffs.

The issue at hand, the one that has divided America and Europe, is US military intervention. You dismiss this as ’Kissingeresque geopolitical interpretations’ (by the way, what a wonderfuly monstrous phrase!). What on earth do trade barriers have to do with the US doctrine of pre-emptive invasion? I don’t recall ’eliminating unfair trade barriers’ as one of the reasons for invading Iraq.

I’d also be wary of crude national or continental stereotyping. It is reminiscent of Thomas Friedman on a bad day: Europeans are this, Americans are that. You sound as if you were talking of different species. I should hope most Americans don’t feel this way.

Shaken: You’ve brought up a series of issues that, also, have nothing to do with the thread subject.

Yet my point was to address the original thread. Tobias tries to compare what Kissinger said about the role of a particular nation-state, and how it affected geopolitical considerations within Europe, by contrasting that with the role of the US today.

What I suggested was that it’s not the role of the nation-state that matters, but which economic bloc adopts free-market principles more completely. Eventually, the borders of the nation-state become irrelevant; what matters are the borders of the economic bloc, and how much free-market principles are adopted within that bloc.

In the case of the EU, it does not appear that the welfare state will be dismantled, - therefore, it will not emerge as a serious rival to the US. In the case of the US, there’s been quite a lot of success in spreading free-market principles through NAFTA (though I would like to see Mexico - and Mexicans - more integrated with the US), and the other Central American states which are slated to join.

The advantage for NAFTA is that there’s not much of a welfare state in Central American states blocking the spread of free-market principles. The disadvantage is that there are a host of other problems - poverty, poor educational standards, corruption - that could nevertheless be overcome through the free-market if migration would be made easier than it is now.

NAFTA also has the advantage of spreading and adopting other cultures. The EU seems determined to stay “European”, - locked within a geopolitical construct, and hobbled with a welfare superstate.

There are solid and credible reasons for increasing collaboration between European nation states before getting to the creation of a counter-weight to periodic bouts of pre-emptive unilateralism by American administrations. And we don’t need to invoke arcane notions of ethnic cohesion or resurrecting the Holy Roman Empire.

It is a cultivated myth that America has a “free-market” economy. Consider:

“The first marketable [semiconductor] chips were not produced until 1961, but they were so expensive compared with transistors that they had no commercial market. Nonetheless, the timing was fortuitous. President John F Kennedy had just committed the United States to a landing on the moon by the end of the decade. The new ICs [integrated circuits] would be critical to the space program’s success and to related military technologies. The US government, and especially the Department of Defense, became the first major chip customer and constituted the entire market for ICs until 1964.” - from David Yoffie: International Trade and Competition (McGraw-Hill 1990) p. 390.

That was neither the first nor last example of the US government, and especially the Department of Defense, applying defense spending to underwrite the research, design, development and marketing risks of innovative technologies. Designing and building the B-47 and B-52 bombers helped towards Boeing’s downstream design and assembly plant costs of producing civil airliners. The SEMATECH technology support program, launched in 1987 by Caspar Weinberger [DOD secretary in the Reagan administration], was intended to regenerate semiconductor chip design and manufacturing . .

America has the world’s largest economy. Governments of smaller economies cannot afford the scale of public spending necessary to cover the technical and marketing risks of innovation and hope to make much of an impact on commercial markets with novel technologies. Size matters for that reason and also because, as Adam Smith put it in 1776: “the division of labour [bringing higher productivity] is limited by the size of the market.”

The sheer size of the American market makes it more likely that sunk investment costs for an innovative project can be recovered from home market sales making it feasible to cut prices for export sales to pre-empt the development of potential competitors in other countries. By contrast, the European market is fragmented by barriers of different languages, cultures and distictive national preferences and technical standards. Trade barriers in Europe used to be more significant than they are now but residual barriers persist.

Partly because of its low overall tax burden, America also has a vibrant venture capital market well atuned to investing on the swings and roundabouts principle - the American movie industry illustrates the significance of that. On average, it is reckoned that a typical movie studio doesn’t recover production costs on 7 out of ten of the movies it makes but it recovers costs or just better on 2 out of the ten and one of the ten is blockbuster box-office success which pays for all the loses and more. The trouble is that the blockbuster successes cannot be predicted with complete confidence - some small budget movies can be huge successes and some large budget movies can be catastrophic commercial failures. In America, venture capitalists can afford to spread their investments across promising selections of possible winners whereas in Europe investors are more likely to have to try to pick only the winners - and, of course, in Europe, tax burdens are generally much bigger than in America so there are fewer wealthy investors and successful investors get more heavily taxed.

Bob, you’re extensive comment sounds like quite an endorsement to the free-market model after all, especially towards the end.

And, it is true that America doesn’t have a true free-market economy. The point, though, is that is the model to aspire to.

And I wholly agree with your concluding comment: Europe’s tax burden discourages domestic investment.

Lower the tax burden, scale down the welfare state, and you might be in a position to take on the responsibilities America gets routinely straddled with.