There is no question that Europe is not in a good place right now. Brexit, the refugee crisis and the danger of terrorism are just a few symptoms. And real economic recovery seems distant.
While our political decision-makers scratch their heads over solutions, many citizens have long lost confidence in the ailing European project. The shroud of fear about the future that has settled over the Continent can also be explained by the fact that for many people, change has not meant progress. The rapid pace of technological development and the fundamental upheavals it has brought to the economy have left many citizens feeling out of their depth.
The speed of these changes is connected to high liquidity surpluses and expansive monetary policy flooding the markets with cash. The attempt to stimulate investment with extremely low interest rates has led to a few privileged investors – in the absence of attractive returns from other assets – investing heavily in new technology. So the number of unicorns – start-ups with a market evaluation of at least $1 billion – has increased worldwide to 180, with a total value of $700 billion.
For enthusiasm in the European project to be rekindled, we need confidence – in our governments, the European Union and a shared future.
But a large part of the population derives no use at all from this technology boom. One example: In 1990 the stock exchange value of the three biggest automobile manufacturers in Detroit amounted to $36 billion with 1.2 million employees. By contrast, in June 2016 the stock exchange value of the three major internet giants from Silicon Valley amounted to $1.3 trillion, though they employ just 191,000 people.
It’s no wonder normal people feel abandoned. The rapid change is unsettling. And as automation and digitalization destroy jobs, saving is no longer worthwhile. People are looking for easy answers to problems. The success of populist parties is an indicator of the tense mood to be encountered in many places. For enthusiasm in the European project to be rekindled, we need confidence – in our governments, the European Union and a shared future.
For that to happen, we must ensure that the technological revolution is put at the service of everyone. We have to understand exactly what its implications are, so we can recognize and control opportunities and risks, for example when dealing with artificial intelligence or cyber security. And in the future, the use of personal data by third parties has to be made a worthwhile activity for normal consumers. It is important that we do not focus blindly on digital transformation, but look at necessary changes in other areas, as well. We should also invest this additional capital in infrastructure projects of the future promising high returns, with things like European “smart grids.”
From a macroeconomic point of view, we must urgently implement the financial and structural reforms needed to increase interest rates in the long-term. The consequence will be that investments become more selective, bubbles are avoided and saving for the future becomes worthwhile again. And then we need joint projects to get citizens feeling excited again. Why not, for example, an Erasmus Program to promote education and training in other E.U. states?
It is important that we give people the feeling they are part of the European project. To do that, we have to come up with bold solutions to their problems, like youth unemployment. In view of the demographic development of Europe, this is surely no hopeless task. European leadership, national governments and other decision-makers – particularly within the business community – all have to make their decisions easier to understand. And that requires clear communication using all channels, especially digital, to reach people more effectively.
And we should concentrate on those whose responsibility will be the European economy of tomorrow – our startups in Berlin, Paris or Barcelona. We have to support their entrepreneurial spirit, enthusiasm and optimism. It’s about defeating European skeptics with their own weapons – emotions.
Europe has to redefine its values and ideologies with regard to economic policy, too. In Bratislava, Angela Merkel and François Hollande promised that France and Germany would put their weight behind reinvigorating the ailing Europe project.
Let’s do our bit to help them meet this challenge.
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