Time has come for a 'United States of Europe' – that includes Turkey
Either Europe develops into a political union or it moves backward as a continent of nation-states that have neither political nor economic clout – surpassed by China and other emerging nations.
Economic crisis in the United States and in Europe, the rise of the emerging economies led by China, and the revolutions in the Arab world are shaking the world order. In this context, only a new and expanded vision of Europe can provide a key pillar of stability in the coming decades.Skip to next paragraph
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As they seek to cope with the competitive challenges of globalization, Europe and the US must at the same time deal with the consequences of unregulated financial markets and excessive national debt. To solve our common problems, we must coordinate our regulatory approach and chart a path of economic growth in order get our citizens back to work and to pay down the wall of debt.
Though the American free market and the European welfare states are structurally different systems, there are several experiences from the German modernization process that began eight years ago during my term in office – particularly with respect to reducing unemployment and expanding exports – that are worth sharing.
In the last few years, Germany has managed to reduce the number of unemployed by around 40 percent while at the same time raising exports by around 50 percent, despite the mounting global financial crisis.
So what did we do? My reform program, Agenda 2010, saw Germany respond to two challenges: globalization and demographic changes in German society. We changed areas of the welfare system, in particular health care, pensions, and unemployment security. Also, Germany’s short-time working program played an important role, where the state now shares the costs with industry to keep skilled workers on the payroll during economic downturns, thus enabling them to scale up quickly when the economy picks up.
We also made pensions and health insurance more flexible and placed greater emphasis on the responsibility of the individual in keeping costs down.
For the German welfare state, this step marked a paradigm shift that many believed would carve away hard-earned benefits. In fact, we were able to strengthen the system by making Germany globally competitive and ensuring that benefits remained affordable for our aging population. At the same time, we raised expenditures in education, research, and innovation. This gave a further boost to the German industrial base. Implementing these reforms was politically challenging – they cost me my job – but the result has shown it was worth it: Germany is now the best situated of all European economies. France, Italy, Great Britain, and others now have to catch up with this reform process, but under much more difficult conditions.