What the State of the European Union Could Mean for America

This election cycle marks the first time since the Industrial Revolution that the American political dialogue is seriously considering European-style socialism as a viable path toward prosperity.

Strangely, however, little of the focus has been on the actual implications of such leftward ideologies, despite the existence of an entire continent as evidence.

One must understand the current economic state of Europe in order to understand how a pivot away from liberalization in favor of what Sen. Bernie Sanders (I-Vt.) calls democratic socialism would do to our economic situation stateside.

The issue was the focus of an event hosted on Tuesday by the Cato Institute. The panel discussion featured a holistic analysis of the effectiveness of the European Union in spurring economic growth.

At its birth, the European Union was seen as a harbinger of liberalization; in other words, the EU would help jumpstart a widespread adoption of free market, privatized principles over Europe’s general legacy of monopolistic public enterprises.


Looking at the current economic crises in Europe provides a preview to what socialist presidential candidate Bernie Sanders, above, is proposing. | Photo: AP

But with the recent collapse of order in Europe, coupled with a growing sense that the union is becoming more fragmented due to increased border restrictions and disputes over austerity measures in Greece especially, some Europeans question whether this path toward liberalization has been effective.

Massimiliano Trovato, a research fellow with the Instituto Bruno Leoni in Italy, argued that the countries that have been active EU members for the longest period of time have seen the greatest boost in liberalization — particularly the United Kingdom.

“But the main issue is that although liberalization is financially free, it is politically costly,” Trovato said.

The problem stems from the delayed returns offered by liberalization. For a government that has controlled monopolistic public enterprises for years — such as postal services, energy services or travel services — the ceding of these services to the private market would result in significant and immediate losses in net governmental revenue.

“They are cash cows for these governments,” Trovato said. “Liberalization will unleash a great potential for economic growth, but it takes time for these changes and returns to be felt.”

“The main issue is that although liberalization is financially free, it is politically costly”

Trovato also noted a soft form of liberalization, in which governments technically relinquish control of public monopolies to the private market by selling stakes in said monopolies, but controlling interest remains in governmental hands and barriers to entry for competing companies remain as daunting as ever.

As in America, Europe is facing a problem of short-term thinking, Travato said. Political leaders are thinking in terms of election cycles, when what is necessary is a widespread cultural shift that could take more than a generation.

It can be argued that America would require an equally improbable cultural shift in order to move in a direction that resembles Democratic Socialism.

As Sanders himself has stated again and again, it would require “a revolution” — although what kind of revolution it will be, and the impact of said revolution, remains as murky as the future of Europe.

Evan Smith is a Staff Writer for Opportunity Lives. You can follow him on Twitter@Evansmithreport.