Three scenarios for Europe 2040

Jean-Paul Fitoussi (OFCE) and Eloi Laurent (OFCE) have written a report called 'Europe in 2040: three scenarios'. You can read the reporthere. Fitoussi is the economist who has written with Amartya Sen and Joseph Stiglitz a report on ways to measure economic growth and social progress.

In the paper, they explore three scenarios for the European Union"using history and reasoned imagination as guides".I like that statement.

The three scenarios are:

1. The empty Empire

2. Return of the City States

3. Renascant Europe

The scenarios are respectively a modern version of Antiquity, the Middle Ages and Renaissance.

Fitoussi doesn't make a complex report, rather he points to data that are well known, and puts them into a new context. In his view, scenario 1 is the result of an increasing "empire of rules", in which Europe is lacking ambition. The EU does not regard itself as a "large" economic or geopolitical power, but presents itself as a an empire of democracy reduced to human rights and market pronciples.

A nice paradox:Europe is overregulated but undergoverned.Sounds familiar.

The second scenario is also based on history and current observations. Fitoussi explains that Europeanization has led to a new concentration of wealth in cities, and these agglomeration effects have been accelerated by the achievement of the Single Market. The EU presents itself in 2009 as a "little globalisation", where regional differences are greater than in other developed countries.

The report puts Belgium as an example of the things to come:

The further decoupling of the wealthiest metropolises and regions from other areas will threaten the unity of certain European nation states (current examples are Italy and Belgium).

The third scenario is more optimistic. In that scenario, Europe is revived by social-ecology. This means that Europe would take the opportunities of the Green Economy, and focus on knowledge and competitiveness:

From an institutional point of view, the scenario of a “Renascent Europe” implies that the current European growth strategy, the Lisbon agenda, is abandoned, as its results are far behind ambitions and proclamations. While the objective of the Lisbon Strategy was to foster the transition to a knowledge-based economy by 2010, what we have witnessed is an actual drop in research spending in the EU (1.84% of GDP in 2006 compared with 3.3% in Japan and 2.1% in the United States). In fact, all of Lisbon goals are out of reach for 2010.

Furthermore, this would entail some important reforms. Public investment in education/training and new environmental and energy technologies should be excluded from budget deficit calculations. It would be up to the Council of Europe to determine what it considers as belonging to this category of spending, i.e. to set priorities that the EU intends to pursue ion “European public goods”.

The three scenarios are just an intellectual exercise, but are also three distinct possibilities for the near future. In general, especially people outside of Europe (the Anglosaxon media for instance) have been very negative on Europe. But all in all, the US' much praised "flexibility" and higher growth has shown to be much more imbalanced, and the root cause of the biggest crisis in 60 years. There are fundamental weaknesses in the European model, but also a huge potential with the growing Green Economy.

The “European Community of the environment, energy and research” would pursue three closely related objectives – energy independence and thus security for Europe, the preservation and improvement of terrestrial ecosystems and human development and finally what is now referred to as “green growth”. In this perspective, European taxation on carbon (both through the EU ETS and carbon taxes) should be reviewed, improved and reinvented.