Gordon Brown: Old European model "not working"

There has been quite a lot of discussion lately about the European social model, the Nordic model, and even Mr Blair's 'Anglo-social' model. In part this has been prompted by the Informal EU Heads of State meeting to be held at the end of October, which will discuss such matters. So this week I will posting daily on the 'European models' debate.

Seldom one to miss out on such an opportunity, Chancellor Gordon Brown launched a blunt attack on the European Union's social model last week. His pamphlet, Global Europe: full-employment Europe, warned that the high unemployment across the continent means Europe's 'old' model “is not working”, and calls for "fundamental" change. Mr Brown also put forward his arguments in an article in last Thursday's Financial Times, Why it is make or break for European social reform (subscription required):

To call for a new social model is not to abandon fairness, but to say that in the new world fairness and flexibility depend upon each other. An old model that leaves 20m unemployed, 10m of them for more than a year, is not working. So the whole emphasis must shift to equipping people for jobs and helping people into work, removing labour market rigidities and combining new incentives with new obligations to take up jobs.

Mr Brown's pamphlet calls for action in three areas to create a more competitive 'Global Europe':

(1) Boosting productivity and competition: speeding up the process of completing the Single Market in key sectors; opening up the market for services; eliminating untargeted and distortive state aids that prevent full and fair competition; implementing pro-active competition policies; and a sustained commitment to regulatory reform.

(2) Skills and employability: the development of modern social and labour market policies to help those without work find new jobs; childcare to help parents overcome barriers to work; reform of tax and benefits to make work pay; and national education and skills policies that equip people to adapt to change work in new areas of comparative advantage.

3) Openness: Europe to take a leading role in the forthcoming Hong Kong trade talks and beyond to reject protectionism and to press for the conclusion of an ambitious trade deal that will completely open markets to exports from poorer countries. As he put it in the FT article:

So pro-Europeans must honestly say that Europe can no longer succeed as a trade bloc looking in on itself. Instead Global Europe must be outward not inward looking, focused on external competition, and adjust its social model to combine flexibility with fairness. And we should recognise that with China and India not only leading in low-cost goods and services but producing 4m graduates a year, the new race is not to the bottom but to the top.

EU Trade Commisioner Peter Mandelson backed Brown on EU reform, saying there was "a very strong case for economic and social reform" in Europe.

However the EU trade commissioner also cautioned that there were widespread public fears about the impact of reform. "I think the problem, if I can put it in this way, is that the pressures of international economic change are seen by people throughout Europe in many cases not as an opportunity but as a threat," he told a committee of MPs on Thursday. Mandelson said there is "a fear amongst people about global competition".

Wolfgang Munchau's piece in today's FT, Economic renewal must wait (subscription required), starts with high praise:

Last week, Gordon Brown, the UK chancellor of the exchequer, produced what I would consider one of the most coherent texts on the impact of globalisation on Europe.  ...Mr Brown’s arguments go beyond the typical plea for labour market reforms. There is hardly an area of economic policy left – both macro and micro, both at national and EU-level – that would not be turned upside down if Mr Brown had his way.

but concludes on a characteristically bleak note:

...despite their many analytical merits, Mr Brown’s proposals are next to useless politically. It has become increasingly difficult to formulate an economic blueprint for all 25 EU members. The economic interests seem to be diverging. The best we could probably achieve is an economic blueprint for the eurozone. But Mr Brown is the wrong man to deliver it and Britain is the wrong country to propose it.

Ah yes. If one was heading for economic reform, you wouldn't start from here.