The Dynamism of Nations

Proposals for economic reform of Continental Europe keep coming. The process does not constitute a unified, reasoned debate so much as an ongoing political auction in which special interests seek votes for the policy change that will benefit them.

Some say the bar to a good economy is the Continent's inflated welfare state and the solution is retrenchment, beginning with raising retirement ages. Others say the impediment is the entire overgrown public sector and the solution is to cut tax rates. The latest view, endorsed by the European Commission, blames a shortage of infrastructure and proposes more bridges and tunnels.

This approach will never reach the heart of the matter. The West's core social values make high economic performance a moral imperative like free speech or trial by jury. Further, the Continent will undoubtedly need some transformative changes of its economic institutions to establish high-performance economies. To reach broad agreement on those changes requires facing some basic questions so far ignored.

A real debate on basic reform has to start with an explicit conception of economic performance - of what constitutes a good business life. Productivity is an important element. Only a high-productivity economy can promise all or most working-age persons a range of careers at high wage rates.