LETTER FROM LONDON
The Great Reform Wimp-Out
When it comes to domestic policy, even Tony Blair has no guts.
BY THERESE RAPHAEL
Sunday, February 1, 2004 12:01 a.m. EST
The following are among the most radical reform programs to be found anywhere in Europe today.
• A plan to save British universities from decline due to massive funding deficits--by allowing modest tuition fees, covered by government loans and repayable only when the student earns a minimum income after graduation.
• A plan to overhaul Europe's most dysfunctional pension system--through reforms that start in 2008 and hinge on raising the contribution time to 40 years from 35.
• A plan to reduce one of Europe's most complex and onerous tax systems and one of the Continent's most employment- and growth-stifling welfare systems--with a modified, less drastic version of an earlier reform plan.
• A plan to reduce France's unemployment rate--by, it appears (but isn't clear), allowing more-flexible employment contracts and lessening some other labor-market restrictions.
Make no mistake: Tony Blair's proposal for university "top up" fees, Silvio Berlusconi's nip-and-tuck pension reform, Gerhard Schroeder's welfare and tax cuts, and Jean-Pierre Raffarin's reforms to tax and labor-market policies are all, to varying degrees, departures from the social-market consensus that has dominated European politics for much of the postwar period. It's progress. Possibly, they are the thin edge of the wedge, if we're being optimistic.
But if we're honest, we'll admit that as reforms go, these are mostly wimp-outs. What is really remarkable here is not that they are happening at all, but rather how ultimately skimpy they are. Where is the gutsiness in a reform to lift firing restrictions in Germany that only impact firms of fewer than 10 employees? The original plan affected firms of up to 20 employees--whoopee. Instead of questioning the social-market model, today's reformers are simply tinkering with it.
Where are Europe's ideas-leaders, its visionaries, its political earth-movers?
The great reform wimp-out must have a cause. Is it that: a) Europe doesn't need more reform, contrary to what we economic liberals keep arguing, b) Europe isn't ready for more reform, or c) Europe doesn't have leaders who are willing or able to champion more reform?
Perish the thought of the first option. Italy has the highest debt ratio in the EU, Germany is stuck in no-growth land (with plenty of company) and France is laboring with nearly 10% unemployment. Britain may still be one of Europe's freest countries economically, but its unions are growing increasingly demanding, its public services increasingly dysfunctional and its once-great universities increasingly lag behind their American counterparts. I'll take "c"--though it's worth coming back to the "readiness" factor as well.
Tony Blair, Silvio Berlusconi, Jacques Chirac and Gerhard Schroeder all took uncompromising stands on either side of the defining foreign-policy issue of 2003--Iraq. Yet all have domestic-policy records marked by compromise and caution. It's certainly true that the head of government or state often has more political leeway to set foreign policies than to change domestic ones. But that's too facile an explanation for the colossal underachievement in Europe today.
Opposition to change is a given in politics. What distinguishes the domestic successes from the disappointments isn't so much the limits on what is possible but a deficiency of imagination, and often courage. The only European leader who stood tall and on principle both at home and abroad, Spanish Prime Minister Jose Maria Aznar, delivered reforms that lifted Spain's economy to the big leagues. Each country has its own peculiarities of course, but Mr. Aznar's example demonstrates the potency of focused, visionary leadership. The lesson from Spain--indeed from all truly reforming governments--is that it is necessary to aim high, move quickly and risk everything to get results.
But do you also need a willing electorate to produce radical reform leadership (option "b")? "It has to get worse before it gets better," is a common refrain among disillusioned would-be reformers. That is certainly true up to a point. But it is also true that leadership is all about having a vision that extends beyond the horizon of most voters and creating demand for needed reforms.
It's no mere coincidence that all the aforementioned leaders--Mr. Aznar excluded--face low and sinking approval ratings. And this in a year where Europe will hold some 14 local, state and European elections. None have delivered results that merit public confidence. This, in turn, can be said to stem from a lack of vision, or intellectual underpinning.
F.A. Hayek wrote in "The Intellectuals and Socialism" that "the main lesson which the true liberal must learn from the success of the socialists is that it was their courage to be Utopian which gained them the support of the intellectuals and therefore an influence on public opinion. . . . Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible." Today's politicians are far too pragmatic and not idealistic enough.
The point is that whatever wiles and skills they possess, politicians must in the end deliver. Delivering in today's Europe means reducing unemployment, while generating growth and job-creation. It means giving people opportunity as well as choice. That's a job for the reformer, but the successful reformer needs a philosophy. Messrs. Blair and Schroeder understood this intuitively when they crafted the Third Way and the Neue Mitte, but both were pseudophilosophies, more public-relations tools than intellectual foundation.
While we can, if we're lucky, look forward to a continued dribble of half-hearted reforms from the current crop of leaders, the real work will fall upon those who come after Silvio, Tony, Gerhard and Jacques--Europe's reform weenies--have left the stage. Those who would replace them, and do better, will need to be armed with more than just good PR skills and the pragmatist's penchant for splitting the difference. They must be prepared to wage a war of ideas.
Ms. Raphael is editorial page editor of The Wall Street Journal Europe. |
