Is the 'European model' broken?

Today's post on economic and social models... Not so long ago, Financial Times columnist Martin Wolf asked Is the 'European model' broken? (subscribers only, but archived copy here. Hat tip: Unions-Firms-Markets)

To many outsiders the answer is a strong yes. Increasing numbers of insiders are beginning to agree. They fear that a supposedly savage Anglo-Saxon liberalism will overwhelm the civilised European economy. Happily, this dichotomy is grossly oversimplified.

...After many disasters, Europeans struck a successful balance between individual effort and collective responsibility after the second world war. All western Europeans share a commitment to what is, by global standards, generous, state-organised social welfare. But André Sapir, the Belgian economist, notes there are  at least four quite distinct models of how to do so.

The paper Wolf is referring to is entitled Globalisation and the Reform of European Social Models (PDF), and was prepared for a recent Ecofin Council meeting by Andre Sapir of the European Center for Advanced Research in Economics and Statistics in Brussels.

For those used to the turgid and politically correct literature in this field, Sapir is refreshingly blunt. For example, on the Lisbon reform agenda he states that "unfortunately Lisbon has not delivered":

A two-handed strategy combining reforms at EU and national levels would be best. The Lisbon Agenda tried this but is rapidly failing. ...the Lisbon method was simply too weak to deliver. Five years after its launch in 2000, it has delivered neither a major thrust towards completing the Single Market nor significant labour market reforms.

I'm sure that caused some apoplexy in Brussels. But the overall tone of the paper is constructive, calling for the European Union to complete the integration of its 27+ economies as "the utmost priority", and for member states to undertake national reforms of labour market and social policies. For anyone intersted in these debates it is well worth reading.

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