The European Disease: Economic anxiety is a product of the welfare state.

No one knows for sure to what extent economic anxiety influenced the decisive "Non!" by French and Dutch voters against the new European Union Constitution this week. But one thing is certain: The French and much of the rest of the European Union have much to be economically anxious about.

The French unemployment rate has hovered around 10% for nearly a decade, and almost half of the jobless have been out of work for at least a year. If the U.S had an unemployment rate as high as France, there would be about six million more non-working Americans — the equivalent of placing every worker in Michigan on the jobless rolls.

Our point here isn't to engage in gratuitous French-bashing. The truth is that the economic anemia afflicting France has become the standard bill of health to varying degrees in virtually all of the nations of Old Europe, particularly Germany and Italy. Once upon a time the intellectual elites in Europe and the U.S. trumpeted the economic accomplishments of European social welfare state policies. Today the conclusion is nearly inescapable that this economic model simply doesn't work to create jobs, wealth or dynamism.

The EU model of job and retirement security is unlikely to survive competition from a world which is "flat." The Chinese are coming. Here is my post in the wake the rejection of the constitution which presages much of what this author has to say:

Euro dips on report of EMU discussion (Failure of the Euro Discussed)http://www.freerepublic.com/focus/f-news/1414272/posts

Speculation over the bust up of the whole union are not as far fetched as one might suppose.

The vision of a socialist candy store, confected by France, and bought into to a lesser degree in Germany, is about to turn into a nightmare. The French just voted not over the interstices of constitutional interpretation contained in this piece of written diarrhea, but to protect at all costs their pensions, heath care, job security and holiday schedule. The campaign against the referendum was directed against a super state which might force France to submit to an "anglo" economy, read: free market. They wish to avoid such markets because they sense that they cannot maintain the free lunch if they have to compete against the Asians.

America has elected a path of open competition to survive the Chinese. The Brits have followed more closely than anyone else in Europe. America and Britain are thriving with low unemployment. France is attempting to repeal economic laws like supply and demand at the ballot box. They might as well pass a law repealing gravity. Their unemployment, truly stated, is in excess of 10% and 40% of the rest work for some part of the government.

As Edmond Grey said, the lights are going out all over Europe. Those countries which can muster the fortitude to follow the American model will come through nicely. If they have that much fortitude - to accept the pain of the free market along with its benefits- they have the fortitude to leave the French and their fellow travelers behind in their misery.

And thus could we see the end of the Union.

As the nearby table shows, the U.S. has substantially outperformed Old Europe in wealth and job creation. The economic growth rate of the European Union nations since 2003 has limped along at about half that of the U.S. In the 1980s and '90s the U.S. created about 40 million new jobs; Western Europe created some 10 million, well over half of which were in the public sector. If this divergence in economic performance continues for 40 years, the American worker will be roughly twice as wealthy as his European counterpart.

The Europeans have created a vast constellation of domestic policy interventions that are cloaked in the seductive rhetoric of compassion, fairness and cultural sophistication. These policies include highly generous welfare benefits for the unemployed; state ownership and/or subsidy of key industries (such as Airbus); rules that make it difficult to hire and fire workers; prohibitions against closing down plants; heavy protections of labor unions against competitive forces; mandatory worker benefit packages that include health insurance, child care allowances, paid parental leave, four to six weeks of vacation; shortened work weeks; and, alas, high taxes on business and labor to pay for these lavish benefits.

In sum, European nations penalize work and subsidize non-work, and no surprise, they have gotten a lot of the latter and far too little of the former. By contrast, the U.S. model -- allegedly cruel and "laissez-faire" -- has done much better both by economic growth and worker opportunity.

The frustrating irony is that, at the very moment in history when Europe's model is in disrepute, many U.S. politicians still want to emulate it.

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