BlinkVib

LA BAULE, France -- LA BAULE, France

A top executive of one of Europe's largest technology companies is explaining over lunch the essence of the European disease.

"Given the choice between wealth and the good life," he says, "Europe chooses the good life."

It's a joke, of course, which he delivers with a broad smile before tucking into a plate of fish carpaccio. His point, however, is quite serious. After all, a nation that is accumulating wealth can always buy the good life, while without the wealth, the good life will soon disappear. But it is a distinctly European sensibility that stubbornly fails to draw the connection between the two.

Last year at this time, when European business and political leaders gathered at this elegant seaside resort for their annual economic gabfest, there was a sense that maybe Europe was finally ready to get real about its lack of economic competitiveness. But events since then have moved things in the wrong direction.

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Elections in Germany and Italy have been so close that the new governments lack the mandate to push through needed economic reforms. Here in France, the government has been immobilized, first by a wave of immigrant violence, then by a student strike over job security, and most recently by a dirty-tricks scandal involving the prime minister and his main rival.

In fact, even as government officials here were releasing a highly selective scorecard designed to show what a great place France was for foreign investment, its beleaguered president, Jacques Chirac, was sending just the opposite signal, declaring that as a "matter of principle" he was against the proposed merger of the New York and Euronext stock exchanges.

Exactly what "principle" Chirac had in mind, he didn't say. But from his comment, and a similar one the next day by the French head of the European Central Bank, it would appear that it is more important for the French establishment that the Paris Bourse remain under European control than for French companies and entrepreneurs to have access to the world's deepest pool of risk capital. Their comments served only to reinforce the old nostrum about France as a place where politics operates like a business while business is run like politics.

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The harsh truth about Western Europe is that it has been living off old capital for years. Yes, it has a skilled workforce, great infrastructure, world-class research, profitable and growing multinationals, and access to capital. But somehow Europe has been unable to put the pieces together to create a globally competitive economy.

The percentage of workers with college educations, it turns out, is well below that in other industrialized countries, with too few of those in engineering and other high-tech fields. The infrastructure remains largely in the hands of public employee unions that, in an economic sense, extract nearly all of its value for themselves.

While Europe is a world leader in generating patents on a per-capita basis, it hasn't been able to transform those insights quickly into hot products and hot companies. Its multinationals have grown largely by investing elsewhere and importing more and more from low-cost suppliers.

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And, Britain aside, it still hasn't developed robust capital markets that can provide seed money for new ventures and demand top performance from public companies.

Moreover, much of its service sector, where most new jobs are likely to be created, remain inefficient because of regulations meant to protect existing firms from "disruptive competition."

The one factor that perhaps underlies all others, says Joshua Bower-Saul, a Paris-based business consultant who grew up in Bethesda, is the nearly complete lack of an entrepreneurial spirit or risk-taking culture in Europe. From primary schools through universities, European children are taught that capitalism is exploitation and that government is the source of economic progress, he says. Kids never open lemonade stands or raise money with car washes. Unsuccessful entrepreneurs are socially ostracized because their failures cost neighbors their jobs, while successful ones are rarely admitted to the corporate and political elite.

This is a cultural problem more than strictly an economic or political one. But until it changes, I suspect, Europe will continue to choose the "good life" over creating the new wealth necessary to sustain it.

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