November 10th, 2011
03:30 PM ET

Europe's real problem: Lack of growth

By Fareed Zakaria, CNN

I was in Germany this week and the mood there is pretty grim: Europe is facing its most severe challenge since 1945. If the Greek crisis morphs into an Italian crisis - Italy being too large to bail out - the entire structure of post-World War II Europe could unravel.

Finally, European leaders seem to recognize that their strategy of kicking the can down the road has not worked. The result will not be a dramatic solution - that is not how Europe works - but, more likely, a series of steps that together will be more comprehensive than anything done before. But they will not address Europe's core problem: a lack of growth.

The Europeans - by which I mean the Germans - are trying to find some solution to this crisis that will not let countries like Greece and Italy off the hook. Germans feel these countries need to feel the pressure - only then will they reform their budgets and their habits. So the solutions will be complex - trying to stop a crisis while not bailing out these countries entirely.

The real problem - however - is not so much that Greece has been unwilling to make sacrifices. It has made many. But Greece's budget numbers look bleak because its growth forecast looks bleak. It needs to address a much larger question of competitiveness. What can the Greek economy do to attract capital and investment? And at what wage levels? These are questions most European countries will need to answer to fully solve their problems.

Italy's economy has not grown for an entire decade. No debt restructuring will work if it stays stagnant for another decade. Even Germany is not immune, with an average growth rate of only 1.5%. German officials know that with a declining population, in five to seven years the country is likely to grow at an annual rate of just 1%. That's not much of an engine for Europe.

Europe needs a crisis agenda to get out of its bind, but beyond that it needs a growth agenda, which involves radical reform. The fact is that Western economies - with high wages, generous middle-class subsidies and complex regulations and taxes - have become sclerotic. Now they face pressures from three fronts: demography (an aging population), technology (which has allowed companies to do much more with fewer people) and globalization (which has allowed manufacturing and services to locate across the world).

If Europe - and, for that matter, the United States - cannot adjust to this new landscape, it might escape this storm only to enter another.

For more on this, read my column in The Washington Post. For more of my thoughts throughout the week, I invite you to follow me on Facebook and Twitter and to bookmark the Global Public Square. Also, for more of my takes, click here.


soundoff (366 Responses)
  1. Jon (not Huntsman :)

    If Germany's population is declining, that means more wealth per person. Does its economy have to grow?

    October 16, 2011 at 10:51 am | Reply
    • kestutis Kairys

      If economy would growth in such a way, it would be long ago EU population equal to 1. Because they would know that economy growth not because of aggregate demand but because of contraction of aggregate population supply.

      October 16, 2011 at 11:41 am | Reply
      • R Burns

        WHAT???

        October 16, 2011 at 5:39 pm |
      • nick

        http://www.magazinebst.net

        October 17, 2011 at 6:59 am |
      • jonny5

        Maybe..

        October 17, 2011 at 7:02 am |
      • George

        Exactly !! Why doesn't everyone else see this ??

        November 13, 2011 at 10:10 am |
      • Punisher2000

        Would you run that by me once more?

        November 13, 2011 at 10:37 am |
      • hawaiiduude

        again in english please.

        November 13, 2011 at 11:47 am |
    • Dr. jmw

      Economic systems have relied so heavily on constantly increasing populations as the only way to promote "growth". This has been followed to the extreme of gross over-populations of the planet, global warming, massive death due to droughts and failure of crops, new, unusual diseases spread widely by proximity of their "substrate"and ever increasing opportunities for harmful mutations, etc.
      Unbridled, nay often encouraged, human reproduction, without the means of feeding, clothing, educating, and employing the offspring, is spiraling to an calamitous conclusion.
      But the subject remains untouchable! A political and social "third rail". (Women's right are of course crucial to a new model.)
      I would be delighted to hear FZ's take on this totally ignored problem, and an suggestion as to a new economic model based on something other than the current population explosion.

      October 16, 2011 at 2:43 pm | Reply
      • gmj

        I agree with you, jmw, and I will go a step further. There will not be economic growth, because the world is running out of resources. Any economic upswing causes the price of oil to fly upwards. The air will be sucked out of the western economies by the cost of vanishing resources. In fifty years, we will not be able to support the population of this planet. The human race has never had to deal with a situation like this, and we will wait until it is too late.

        October 16, 2011 at 5:21 pm |
      • rana

        I agree with you..I look at India and despair at the environmental degradation that has and is taking place due to huge over population..the 7 billionth baby is being heralded here. Growth is happening here essentially due to demand of this huge population for increasingly better foods and material things like cars TVs etc..somewhere the economists and policy makers have forgotten the old Malthusian theory of population..which outlines that the earth has limited resources and it must be utilized judiciously.One easy way would be to distribute population across the world to take care of growth . For example there are many in India who are salivating at the real estate available in the US (some are investing) however if the US were to open up immigration to say people who invest in property there ..am sure the this one act would kick start the flagging economy of the US again.

        October 17, 2011 at 9:14 pm |
      • bfred

        If overpopulation was the result of seeking economic growth then the U.S. and Europe would be the most crowded places on earth. Population growth only become overcrowding in situations where resources are poorly managed, typically as a result of poor governance.

        November 11, 2011 at 3:31 pm |
      • Roger E.

        You are right in that we need a different model. There is one but it gets little publicity and currently has little traction. It's called a steady state economy and is championed by groups such as The Club of Rome and the Center for the Advancement of the Steady State Economy. Continued economic growth is just not possible on a finite planet. In the end we have to work less hours while all contributing to our overall wealth and health. We need more time in our lives rather than more things. A steady state economy does this. In the body continued growth of individual cells means that we die because of cancer. This is what continued economic growth is, a cancer on our society that will kill us in decades to come. We just cannot see it now.

        November 12, 2011 at 4:20 pm |
      • simon

        i agree with roland. growth ia a way but look what happened with that model. growth cannot grow foreever with out leading to todays problem. rome as an empire grew only because it took over other societies to feed itself. when rome reached its limit of conquest it rapidly declined. the us has gone to at least three industrial revolutions which employed the declining farm population, absorbed the war expansions, and the technological revoludtion of space exploration. as an example industry can only grow with population expansion and not with increased consumption. therefore the annual increase in profits is not sustainable now or in the future unless another revolution occurs and then what are we to do with the unemployed workers.

        November 12, 2011 at 4:57 pm |
      • Sharang

        Dr. jmw: It seems to me that most of the comments on this article have one thing in common: "Population Growth". The readers think that population growth is the major (or only) issue for all this economic crisis.
        While it maybe considered an issue to some extent, the major PROBLEM in European Union and USA is "FREE Social Security/Government benefits".. Governments spend a MAJOR amount from their budget on unemployment benefits, healthcare, social benefits (which goes to bums). Even if the govt. doesn't have enough money to provide these benefits,it take LOAN from other countries and increase their Debt. Hence, the DEBT crisis in EU and USA.

        A solution to the debt problem is to reduce all the SOCIAL BENEFITS and increase TAX on rich people. Peace.

        November 12, 2011 at 7:03 pm |
      • Richard O'Brien

        Very well put! Unfortunately our economic system is based on "growth". Short-sighted and greedy capitalists are never happy with fair profits. They always want more this year than last year. Growth has to stop!

        November 12, 2011 at 8:14 pm |
      • Paganguy

        We consume way too much. We produce too much. We work long hours like in 1950. We should reduce the workday to 7 hours or the work week to 4 days. More time to read, more time to hike, more time to go to the beach and enjoy life. Only the capitalist wants an expanding economy; they want to make more money. For what? To buy a bigger castle?

        November 12, 2011 at 11:33 pm |
      • JustSomeGuy

        @Sharang And what do people do with such things as Social Security and unemployment benefits? It's money. They SPEND IT and it helps create demand in the economy. And therefore jobs. And tax revenue. Cutting social benefits doesn't necessarily equal a better economic outlook.

        November 12, 2011 at 11:56 pm |
      • Ottawa Nick

        I agree. Never ending growth is not sustainable unless we find other paces to go. We have to get use to living within our means. The world economy is one big Ponzi scheme where the next, and usually more populous, generation pays for the follies of the previous one. We're wasting the finite resources that we do have and we're scrificing quality of life in favour of standard of living. The whole environmental issue can be mitgated quite simply in one or two generations. Get the world population back down to a sustainable level of 1-2 Billion level.

        November 13, 2011 at 9:27 am |
      • Steve

        You;ve hit the nail on the head!!

        November 13, 2011 at 11:44 am |
      • Supremo_Lagarto

        I think it has more to do with eliminating corruption, slowing population grow, and optimizing the infrastructure of economies as they are. You can't just keep "growing" in a finite context.

        November 13, 2011 at 2:47 pm |
    • j. von hettlingen

      A country relies on a thriving birth rate to renew its working forces. Italy has the lowest in Western Europe, Germany envies France and Sweden. There's a risk that the current generation is relutctant to have children because of the burden they dread to carry, due to financial insecurities.

      October 16, 2011 at 3:49 pm | Reply
      • Clive

        Population is unquestionably the world's major problem. In India, they are running out of water – yes, water. Climate change, oil and other resource depletion are all being caused by over-population.

        Thank God at least the Chinese realised that some decades ago and introduced the one-child-per-family quota. It was draconian and should not happen in a democracy but it is estimated that it saved the World 400 million people.

        This should be the main aim for the UN, above climate change, war and global health. This is the root cause of those problems. It is not simple. If we plan to reduce the world' population then somehow we must provide for the numbers of old people that live while it's happening.

        Not easy but absolutely necessary.

        October 17, 2011 at 3:11 am |
      • j. von hettlingen

        @Clivie, the French poiltical philosopher Marquis de Condorcet (1743-1794) had already pointed out the possibility of food-shortage, if the serious overpopulation in the world wouldn't slow down.

        October 17, 2011 at 6:00 am |
      • Rick

        That's why there is immigration...problem solved.

        November 12, 2011 at 7:45 pm |
      • Jim Hadenburg

        Overpopulation is one of the most obvious problems there is. It doesn't take a philosopher, a cave man can figure that out.

        November 13, 2011 at 3:54 pm |
      • Jim Hadenburg

        China implemented a fix for a China problem. It's like praising the US for fixing obesity, it's a problem that didn't have to be there in the first place.

        November 13, 2011 at 3:57 pm |
    • Whothewhatthe

      Think about it mate, less population means less tax collected. Pension costs go up so guess what government needs to raise taxes to pay for it. Europe only has a couple of countries that are money earners, the rest are bankrupts. Overall Europe is poor.

      October 17, 2011 at 6:48 am | Reply
      • Shannon

        Less population also means less tax money spent.

        The real problem is the profile of a shrinking population – more old people relative to younger, producing people.

        But given that Europe is already overpopulated, there may be no option but to grin and bear it

        October 19, 2011 at 3:43 pm |
      • reACTIONary

        The problem you bring up is a dynamic of a transitional stage. It has to be managed, but once you are beyond the population bubble you can maintain a steady state.

        November 12, 2011 at 8:51 pm |
    • Paulo Emanuel

      More than 80 years of free abortion in most of the european countries ...and you have the social and economic costs exploding now ...there is a demographic crisis not a economic crisis , 2.1% limit its real and dangerous to any living group , be humans or not , bellow this you have extiction, like it or not !!

      October 17, 2011 at 9:48 am | Reply
      • Oassen

        This is ridiculous. In many European countries abortion is not legal or free, and in the places where it is, the rate of abortion isn't nearly so high that it could account for lower birth rates. They aren't even high at all in the liberal countries. Abortion rates are much higher in the United States than in the Netherlands, for example.
        Also, birth rates are actually rising. They are not far below the replacement rate (2.1 per woman) in Scandinavia and some West European countries (France's birth rate is far above it, even). It is mostly East and South European countries where they are far too low. And because of the youth unemployment there, there is substantial migration of well educated Southern Europeans to the Northern countries.

        October 17, 2011 at 11:17 am |
      • Oassen

        And I forgot to add that economic growth has been rapid in many of those Northern countries, so you are right about it not being an economic crisis, at least for those specific European countries.

        October 17, 2011 at 11:21 am |
      • Mark C

        Get psychiatric help.

        November 10, 2011 at 10:27 pm |
      • BostonDawg

        80 years of free abortions means significantly fewer people collecting welfare, few illiterates, fewer criminals, less crime – in general less burden to society on the whole. Interpreting any other way is simply naive and perhaps downright stupid.

        November 12, 2011 at 5:11 pm |
    • Goodguy1

      If the world is not ticking around 7.0%+ growth every year the media let's us all know...especially the investment market folks. This is an end-game mentality. Why must we be willing to grow grow grow? Grow to what? A strip mall in every corner of the world? Bad investment by politicians so they can use a positive growth model to get reelected. What are we headed for? What will money or precious metals be worth when the world becomes unsustainable?

      October 17, 2011 at 8:47 pm | Reply
      • Chris

        Well said, my friend. Well said.

        November 12, 2011 at 4:14 pm |
      • alateos

        I ask this question every day. Then I answer myself... the reason why we need to grow is that we develop enough to be able to migrate into space when the earth is about to explode. But then again, we have 4.5 billion years to do that so I'm not sure what the rush is for.

        November 13, 2011 at 1:36 am |
      • Leepoint

        Is it just a coincidence that the growth rate of 7% is almost the same as the average profit rate of corporations 7%? Could it be that an economic system has to grow to cover what is taken out of the economic distribution to maintain full employment? Just wondering.

        November 13, 2011 at 11:34 am |
      • .

        alateos, true, but we're not working towards space or any sort of human progress at all. We burn up all our resources on bankers and other parasites instead of finding ways to improve our quality of life and odds of long term survival.

        Look at banker pay vs physics pay and you'll know why we'll never develop the technology to move into space. The bankers will consume our resources long before we evolve the intelligence to escape. If we ever do get smart enough we'll probably find there are no fossil fuels left to power the machines to dig up all the rare earth minerals that were put in iphones and buried in landfills.

        November 13, 2011 at 12:41 pm |
    • melewar

      declining population by age advance, meaning less productivity tat subsidises aging welfare benefits, tat is a doomsday for the entire nation. Needing a immigration policy to siphon cheap labour from Afghanistan to start the engine of manufacturing for export, a typical growh tat Fareed is mentioning. Otherwise how to align that landscape grobalisation tat killed its creatior own economy. Thing will change to betterment if the habitual wastage is lifted from the entire nation. try farming and agriculture are the key to this basic civilization. less fuel consumption, basic entertainment more reading book n stay home for dinner , reading to children , kill all holidaying, will reverse the hope to next generation, not the debt to them, it is time current generation sacrifice for next coming generation, because wat we have inherited if the greed of our own generation.

      October 20, 2011 at 11:20 pm | Reply
    • Kareny

      Yes, because there won't be enough Germans to support their unsustainable social welfare state.

      November 11, 2011 at 2:39 am | Reply
      • BostonDawg

        Thank you for at least hinting at the real problem – growth is irrelevant once you can get past the objective of giving money to people that did nothing to earn it. All economies could grow if they were not burdened by a vast and growing number that have apparently forgotten to save for retirement, forgot to stay healthy, or at the other end of the spectrum forgot to participate in life in general by dropping out of school, starting their family as a teenager, and being a general burden to those that responsible for themselves.

        November 12, 2011 at 5:14 pm |
    • Harry Arendt

      This artical and many of the comments miss a series of fundamental points. Wealth is not money, wealth is the labor and consumption of human beings. Europe's past low birth rate has led to less workers and less consumers so it will have less wealth period. Non-labor productivity increases ie robots, increase wealth for the few, not the many so are practically worthless for debt repayment without exceeding ly high marginal tax rates. The European share of the world GDP will decline until they start having more children. That goes for all of Asia as well. So no growth means that the current occupants of europe must learn to live with less to pay off their debt. Hence a lower standard of living for a very long time, easily 50 years.

      November 12, 2011 at 9:56 am | Reply
    • SimplisticSolution

      IF there is no growth of younger tax payer, who is going to support the social security system and the running of the economy and government. Aging does not translate into more wealth if there is no younger population.

      November 12, 2011 at 4:43 pm | Reply
    • Rd

      What you say will not be true because the older population (who are not working) needs money from the younger working population. If there is not enough younger population then there will be no money to pay the older population.

      November 12, 2011 at 9:22 pm | Reply
    • Andreea

      Europe is not US.Trying to put together different culture well determineted for centuries on the 21 century big mistake from the begin.What do you want more look how Russia is divided in pieces, Yugoslavia, etc.Europeans are nationalistic Im not talking about economical differences.But the greedness of rich and powerfull people made all this mess.Thanks

      November 12, 2011 at 9:32 pm | Reply
    • Commojoe

      The true problem with this whole mess ist the underlying system, socialism, which is NEVER going to work in a society or country that values FREEDOM. It, as a system has failed, miserably, eveywhere it's been tried. Europe should have seen this coming, with weaker, less productive countries thinking they were ALWAYS going to be propped up, bailed out, or otherwise handed something that they didn't earn, just like the welfare recipients they are. These failed countries are going to have to accept the rules of the system THEY wanted, since they reap the benefits, they have to pay the price. Let's just hope the Eurozone doesn't drag the rest of the world down with it.

      November 12, 2011 at 10:42 pm | Reply
    • Paulie

      Europe's real problem is the Euro currency I mean isnt it obvious?

      November 13, 2011 at 7:55 am | Reply
    • Cranston Snord

      In theory, no. But like most countries in western Europe and the US, a large portion of the population do not produce anything while consuming public resources – they're retired or on some form of gov't subsidy. So their consumption must be offset by productivity elsewhere. In sum, they need more producers or huge increases in productivity to grown.

      November 13, 2011 at 8:18 am | Reply
      • TalliOK

        Exactly.

        November 13, 2011 at 11:52 am |
    • Punisher2000

      Yes. While the population is declining it is also aging. An older population costs more in services and produces less. All this is very well, but, Fareed, your reporting has a major flaw: no proposed solutions. You are a smart man, well educated. Why isn`t your name on a ballot. Why do you not propose solutions? We really need help right about now.

      November 13, 2011 at 10:36 am | Reply
    • seriouslyenough

      Regarding Germany's decreased population. You are assuming that decline is due to elderly deaths and lack of child birth and not that fact that vast amounts of German businesses are moving to Switzerland, US and South America where the so called free markets are not so manipulated. As a result they take their wealth and much of the population with them.

      November 13, 2011 at 11:24 am | Reply
    • TalliOK

      Zero population growth in the European countries means that fundamental change has to come to their respective societies. The numbers of people paying into the social welfare systems are dwindling while those on the dole are increasing. The northern European countries are in the best position, for now.

      November 13, 2011 at 11:50 am | Reply
  2. JP

    Deregulation in the 90s, the tech bubble at the end of the 90s, which signaled a recession around 2001, and 911 in combination caused this situation. Most of this resulted from government either through active intervention with deregulation or the lack of intervention in protecting the country from 911. Cheap money encourages people to take risks they wouldn't if the penalties were much higher. It encouraged much too much risk taking. What would have happened if interest rates after 911 were at 5-6% and stayed that way? I think arguing that the outcdome would have been the same isn't credible.

    The notion that a stimulus can get us out of this mess ignores the basic fact that the government cannot spend this money (roughly $1T) because it netiher has the capacity to spend it given the amount nor the competency to do so. It is amazing that the government with a factually poor track record of spending taxpayer dollars is looked upon as the best way of solving our economic problems. This is just dogma. People who advocate this should spend sometime within government as employees to get some practical experience on how government actually works or doesn't work. Our recent experience proves that government produces less than zero.

    October 16, 2011 at 11:00 am | Reply
    • Me

      ". People who advocate this should spend sometime within government as employees to get some practical experience on how government actually works or doesn't work."

      Yes – I would suggest taking your own advice – as clearly you reach a conclusion that is completely wrong.

      October 16, 2011 at 4:37 pm | Reply
    • skytag

      Your comment is anti-government dogma. The laughable part is where you say most of this resulted from government, because they didn't properly regulate an irresponsible private sector. There is no factual or rational analysis here, just a string of anti-government talking points that ignore important realities. I sincerely wish every one of you drones who parrots this nonsense about government not doing anything would move to a country that actually has a government that doesn't do anything, like Somalia.

      October 16, 2011 at 4:55 pm | Reply
      • realmike

        @skytag. There is more to a spectrum than just its polar ends. Unregulated capitalism will always implode. A pure socialist model is also not sustainable.

        October 16, 2011 at 5:07 pm |
      • Clive

        Anti-govt dogma ? All large organisations get poorer and poorer at spending money efficiently and effectively because their management becomes less and less careful with their resources as they get larger. Government is the largest organisation of them all in any given country.

        The reason for that is Darwinian. In the prvate sector – and remember most private sector organisations are pretty small – if you spend money stupidly you go out of business. Givernment does not go out of business. It can spend money as stupidly as it likes.

        It's that simple.

        October 17, 2011 at 3:17 am |
    • hez316

      I have to agree with you but there is such a large number of gov't employees (if I remember correctly, there are now more gov't union members than private industry) that any solutions have to accept this fact. If not, the solution is likely doomed to failed.

      October 16, 2011 at 5:48 pm | Reply
    • Bored

      9/11, 9/11, 9/11...nonsense. I'm sick and tired of everyone blaming everything on 9/11. If everyone had been like me and stopped caring about 9/11 on 9/12, the world would have been far better off.

      October 16, 2011 at 6:22 pm | Reply
    • Shannon

      Private corporations are no better than governments when it comes to competancy. The difference is you can vote out incompetant government officials before they wreck the country.

      I find it odd that you acknowledge 90's deregulation as the cause of many of our woes and then decry government involvement in the same breath.

      October 19, 2011 at 3:50 pm | Reply
      • John

        Shannon,
        You must be from Canada. Howelse have you been unaffected by American Greed? The problem is that there are finite resourses and a growing number of ppl. It requires a redistribution of wealth. This is either done by forced redistribution by government or redistribtion through capitalism approved by a blind, stupid public that thinks that one day they will be part of the elite that the wealth is redistributed to. This reminds me of the monarchies the world used to have where an exclusive few owned everything and everyone else had a subsistence living. Wake up, people! The uber-rich do not marry the uber-poor. As the wealth concentrates more and more, most of you tunnel-visioned entrepeneur class will become vassals of the kings!
        Everyone, repeat EVERYONE, needs to become less greedy and learn to live with what they have. Money paid to a bank or an enterpeneur is not in your wallets anymore than money paid to the govronment. It will not trickle down to you from either source. A rising tide does not raise all boats. I sinks those that are anchored to the bottom.

        November 12, 2011 at 7:07 pm |
  3. kestutis Kairys

    Simple said. Only they need growth. If someone would be able to figure it out, there would never be any downturns, because anytime there is slowdown, they just apply that golden rule, we know how to growth. By bailing Banks it won't be any solution to that.

    October 16, 2011 at 11:16 am | Reply
  4. Steven James Beto

    Is the only problem a lack of growth, sir, or is it in an economic philosophy of constant growth? Maybe the myopic condition can be corrected with a prescriptive change in the economic lens.

    October 16, 2011 at 12:02 pm | Reply
    • Rz

      Agreed, the requirement for growth has been like an anvil over our heads. In almost the same breath we're being told we need a vacation, but we need to work harder, longer, and faster. The reality is that the current system is leading us to economic collapse, war, poverty, and starvation. The jalopy of a system we're riding in is out of gas but still rolling quickly down hill. So the only options on the table are either get a new model that works, or wait untul we crash and burn. And by the looks if things, the powers to be have opted for the later. Goodluck to all.

      October 16, 2011 at 12:22 pm | Reply
    • Eric G. Bostrom

      Indeed, it is mathematically evident that no finite environment can support an infiniite conversion of resources into marketable goods before that environment has no more resources for any use. Our current economic system is presumed to offer opportunities for growth without limit. The only response is that nobody now alive will know the difference in hundred years, two hundred years.

      It's a continuation of an old story, humans hunt out all the game or wear out the soil from from farming where they have lived, then just move on. Only when people have the presence of mind to realize that they must manage their resources to prosper will they act any differently.

      October 16, 2011 at 1:04 pm | Reply
      • reform

        Exactly! Good point Eric. Fareed has my upmost respect-However, you can't expect infinite growth year after year with our finite resources. At some point in time that well will go dry.

        October 16, 2011 at 5:52 pm |
    • Jason

      As long as the population holds steady or declines, slow growth is just fine. If Germany were the entire world then 1% growth would be fine because their population is actually declining. The problem is that population is still exploding in other places, growth is exploding in other places, and this is creating inflation that slow growth simply can't overcome.

      A country like Germany isn't really the problem, they're simply a victim of their own past success contrasted with the growth of other nations that need explosive economic growth just to catch up.

      Don't expect the trend to change in our generation. The rest of the world is going to continue growing and catching up, and that's happening by siphoning the economic energy out of Europe and the USA. There are a LOT of people in China and India who are still very far down the wealth pyramid. It's going to take a lot of time and effort before those places are close to the West in prosperity, and until that happens, we'll continue to hear that loud sucking sound.

      October 16, 2011 at 5:12 pm | Reply
    • JohnLI

      Agree with Eric. Any well designed system strives for reliability and stability. Growth, overpopulation, etc. work against these principles. There should periods of both decline and growth in our economies and populations, unfortunately this has not yet happened. Imagine how much easier it would be to meet energy demands if the worlds population was reduced 50%.

      October 16, 2011 at 6:13 pm | Reply
  5. Jennifer

    These commentators have forgotten we have been at war for ten years now. What are we going to do when our military downsized and more people need jobs? Our veterans already have a 30% unemployment rate.

    October 16, 2011 at 1:25 pm | Reply
    • Rz

      The perfect solution is to prove Canada a terrorist state through and through, declare war and invade.

      October 16, 2011 at 6:24 pm | Reply
      • brian

        I second that idea... we should re-adopt the articles of confederation which included a clause on the USA's "absorption" of Canada 😀

        October 18, 2011 at 1:04 am |
      • Shannon

        We're not worried. You can't invade what you can't find on a map.

        October 19, 2011 at 3:52 pm |
    • Kevin H

      We should think about the impact of military intervention and non-military interdiction before we act. We know the boom bust cycles of war and post-war. They're not new. Yet we went into Iraq knowing that what we were doing is wrong – it's now apparent that many members of the Bush administration knew full well that there were no weapons of mass destruction and that though SH was a sadist – he was our sadist. We created the monster, we fanned the flames, we did nothing – just as we're doing in Syria today. Americans have become the laughing stock as cry out in HORROR once the media is able to get pictures of mass graves and dead bodies back to us – until then it's business as usual. I wish we would get our ducks in a row in the US. We should have attended to our domestic issues sixty years ago, concentrated on what Carter said was important in the 1970's and gotten out of the Monroe Doctrine business.

      October 17, 2011 at 11:58 am | Reply
    • Paulie

      Likely we will go to war with Iran for another 10 years until we remove and replace all of their troublesome leadership.

      November 13, 2011 at 7:59 am | Reply
  6. Paul 80

    @Steve Forbes

    Saying easy money at the fed is the root of our condition. Is like saying that if you over eat at the
    Hometown buffet and become sick, it's Hometown fault.

    October 16, 2011 at 1:39 pm | Reply
    • marc gunn

      exactly

      October 16, 2011 at 6:41 pm | Reply
  7. Jack Heinsius

    Which Washington was Messrs. Forbes and Stephens laying the blame on? The one that is dedicated to the well being of the nation or the one where business , financial and top 1% interests have heaped mountains of influence buying cash onto.
    This Halloween I'm going as something really scary – a lobbyist.

    Jack Heinsius

    Jack Heinsius

    October 16, 2011 at 1:42 pm | Reply
    • Appalled

      If you really want to scare people, slip into a purple tee shirt and go as a union goon.

      October 16, 2011 at 5:56 pm | Reply
  8. Robert Ruhoy

    Fareed Zakaria GPS Sunday , with Steve Forbes at round table and others.

    Here is my problem! No one ask the question of where the 7 trillion dollars in US debt over a 3 year period went ????

    I can tell you where it didn't go. NOT TO SOCIAL SECURITY,,,NOT TO MEDICARE,,,NOT TO THE TEACHERS, POLICE, AND

    FIRE FIGHTERS,,,NOT TO SENIOR CITIZENS AND SURELY NOT TO ME and the MIDDLE CLASS OR THE POOR.

    i'LL TELL YOU WHERE ! ! the big corporations, the wealthy paying less % tax than me, THE 2 WARS FOR 10 YEARS,

    and WALL STREET THEFT AND GREED . PERIOD.

    October 16, 2011 at 1:58 pm | Reply
    • Rz

      Exactly correct. And the on-going plan is to milk it to death.

      October 16, 2011 at 2:28 pm | Reply
    • DoNotWorry

      These 1percenters know that the current system will collapse, so they are ensuring that they "get theirs" before it does so. The only real answer is reduction in population... which NO ONE WILL TOUCH except China. I disagree with their means, but it is the only answer. It sure isn't the US answer... 50 million illegals and 38 million legal aliens in 2010.

      October 16, 2011 at 5:22 pm | Reply
      • Sharang

        It seems to me that most of the comments have one thing in common: "Population Growth". The readers think that population growth is the major (or only) issue for all this economic crisis.
        While it maybe considered an issue to some extent, the major PROBLEM in European Union and USA is "FREE Social Security/Government benefits".. Governments spend a MAJOR amount from their budget on unemployment benefits, healthcare, social benefits (which goes to bums). Even if the govt. doesn't have enough money to provide these benefits,it take LOAN from other countries and increasing their Debt. Hence, the DEBT crisis in EU and USA.

        A solution to the debt problem is to reduce all the SOCIAL BENEFITS and increase TAX on rich people. Peace.

        November 12, 2011 at 6:52 pm |
    • The Whole Truth and Nothing But the Truth

      The money slated for "shovel ready" projects went in to prop up the collapsing public sector union pension system.

      The next big bubble to burst in the USA will be the public sector pension systems.

      Poof.

      October 16, 2011 at 5:22 pm | Reply
  9. Squasha

    Curious where exactly you were in Germany and from whom you sensed this gloomy mood. Here in Berlin there's much discussion but the mood according to my equally subjective impression is far from gloomy. Presumably you are referring to the mood around the platinum round-table? Is team World Bank feeling a bit glum? Poor dears.

    October 16, 2011 at 3:29 pm | Reply
    • Rz

      You should have a chat with Markus Zwicklbauer, because for a German, and a tax advisor to boot, he's almost ready to go to jail in protest of what the German government is doing with his tax dollars.

      October 16, 2011 at 4:07 pm | Reply
      • Shannon

        Every country has a few tax-obsessed whiners.

        October 19, 2011 at 3:56 pm |
    • CG

      I was thinking exactly the same thing. Things don't seem gloomy at all down here in Bavaria.

      October 17, 2011 at 2:14 am | Reply
  10. BEAR

    egypts core problem is the brotherhood and people like fareed minimizing it. Not only that, but you have a whole society that was brought up to hate jews and christians as if it were mothers milk...

    nuff said

    October 16, 2011 at 3:34 pm | Reply
    • Appalled

      The Brotherhood would cut off Zakaria's head and throw his body into a ditch. I don't think Zakaria gets it.

      October 16, 2011 at 5:46 pm | Reply
  11. Dr. Carlos M Alcocer Bunker, Wesley Chapel, Florida

    Read: http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010

    October 16, 2011 at 3:45 pm | Reply
    • Gunny

      wiki............really?? Isnt even accpetalbe to a school , Thats your answer??

      November 12, 2011 at 8:26 am | Reply
  12. rightospeak

    I know something about Europe and go there for a few months every year, lately.Your articles confuse the problem even more.
    There are areas in Europe that are growing by leaps and bounds. The problem is destruction of individual economies and indebteness.The problem is the corruption of politicians and banksters. You are trying to put the blame for problems on people that are not really responsible for the crisis. The Wall Street selling of toxic assetts , the Brussell's planned economy, the vast beaurocracy that was created which stiffles national economies, the burden of debt -these are the causes which create poverty and misery. The 1% are getting richer, the 99% are facing austerity measures. Why do you think there are protests ? Because they are lazy, too many vacations ? Only the media perpetrates such nonsense.
    Europe is overcrowded compared to the US and can not handle unlimited immigration.
    The globalists say that European population is going down-wonderful. The Chinese have one child policy and have been doing very well. How many more people do you want ? 10 % of European workers can produce enough goods for half the world . If they keep bringing Chinese imports , have influx of immigrants -they will have everywhere 20%plus unemployment like they have in Spain for years or bloodshed.

    October 16, 2011 at 4:20 pm | Reply
    • DoNotWorry

      I believe in close to zero immigration for all countries. Each country needs to develop its own resources and limit its population accordingly. Since the entire world is actually overcrowded, this will have to be done in any case. The US is not underpopulated at our standard of living, since we are already utilizing resources of other countries. 80 million immigrants is unsustainable. Time to create a new economic model that is about downsizing population instead of "unlimited growth" which everyone realizes... but may not want to talk about since it certainly goes against many religions.

      October 16, 2011 at 5:26 pm | Reply
  13. Geoffrey Henny

    The problem is not so much growth as a readjustment in the global distribution of income and wealth. In the OECD countries we pay our middle class five times what other countries pay theirs, even though they have the same quality of education, skills and access to technology as our middle class. In a world of free trade this cannot be sustained. What we are seeing is stagnant or declining middle class incomes in the OECD because of this. In fact governments are struggling to mask a readjustment which by rights should be dropping OECD middle class incomes by at least 50% right now. The top 1% can profit from this arbitrage and does because they are globally mobile and depend on capital for their income and wealth not labor. In a generation or so things will even out – if we do not destroy the planet for human habitation in the process as a billion more people get cars and eat meat – but there will be suffering along the way. In a sense, at a global level, a certain greater social justice is taking place – since eventually the accident of being born in a non OECD country will not be the big draw back it once was. Most of our OECD middle class will not see it that way for some time.

    October 16, 2011 at 4:29 pm | Reply
    • Willy Loman

      You ignore the fact that we also pay our executives ten times more.

      November 11, 2011 at 2:43 pm | Reply
  14. John R

    The EU's problem is growth? Really?? This has been talked about for decades. Even in the modern sense of GDP growth per year, Europe was lagging nations during the heady 90's...that was one impetus for creating the EU. I guess if there's nothing else to write about, state the obvious.

    October 16, 2011 at 4:40 pm | Reply
    • Appalled

      True. Since the 1970s ghe only sector to experience any appreciable growth in Europe has been the public sector.

      Now they can't afford to pay the pensions.

      October 16, 2011 at 5:53 pm | Reply
      • lolwut?

        And you are basing that assumption on what data? (hint: your ass doesn't count)

        October 17, 2011 at 6:07 am |
  15. Benjamin

    Economic growth as we have come to know it is over: there is no more cheap energy left to fuel it. Much of the growth of the 20th century was a result of cheap oil...$20 could buy the equivalent energy of 15,000 man-hours of labor (one barrel of oil). Those days are past. Until we find another cheap, abundant energy source, we are not going to return to the 3-5% annual growth rates we take for granted (but which are really an aberration; the historic norm for growth since antiquity is more like 0.25% a year.

    We need to write off all this debt and come up with a new monetary and banking system that does not rely on compound interest and eternal growth.

    October 16, 2011 at 4:41 pm | Reply
    • Christopher

      BULLPLOP! There is plenty of 'cheap energy' still left out there to support economic growth. The biggest problem today is that energy prices are being MANIPULATED by SPECULATORS and increased to a level that they shouldn't really be out, so people can 'get richer quick'.

      October 16, 2011 at 4:52 pm | Reply
    • David Helmer

      Last sentence is exactly correct. Write off the debt of current developed nations and start over with a new internationaly constructed reserve currency based on electronic dollars and a board of members that will issue massive infrastructure and medical system support loans that can be financed with 100 to 200 year bond issues and will monitor appropriate regulation and encourage sustainability while not suffocating capitalisms strong points. What possible difference could time make when you think of it on this scale. Many people are calling for a new economic model so let's get it going. It is time for mankind to enter a new era that takes us all into a better future.

      October 16, 2011 at 6:01 pm | Reply
      • Willy Loman

        Sounds like trying to get 500 monkeys to sing in harmony.

        November 11, 2011 at 2:46 pm |
  16. QuietStormX

    I've noticed this from living in Europe and reading all I can about their issues. I feel these Countries with the self inflicted problems should feel the pain then make the changes from the past of asking but, not repaying if at all. People and Countries get wery of those who seem to take advantage. So often each country acts as it wants not looking at the big picture or future. Europe can't act with each counrty alone. They have to act as a whole to help everyone. These Governments have to straiten up and not do what they have been doing putting it off for their children.

    October 16, 2011 at 4:45 pm | Reply
  17. Marek Boudain

    Turkish economy is growing rapidly. Turkey is in G20, it's economy is in top ten best economies of the near future in every forecast. The majority of the population consists of young people, about 40% of whom are under the age of fifteen and 72% are below the age of 35. In European countries, it is the complete opposite, population mostly consists of elderly people and both their working population and general population are in decline. Europe is slowly realizing that their survival depends on getting Turkey in EU. Having only customs union with Turkey, as is now, will not save Europe. Europeans, in the past, moved with their feelings when taking members in. Greek economy did not meet the criteria for Euro monetary union, they played with numbers which their cheat was later found out, but they still let them stay in and kept quiet, and they are now paying the consequences of their own actions. Same applies for Cyprus, which is in the same condition as Greece but delaying the outcome as much as possible like them. The most insignificant and bankrupt nations of Europe, Greece and Cyprus, are slowing down the negotiations between Turkey and EU, taking the union further down along with themselves. On the other hand Turks are realizing that becoming an EU member might not be a good idea at all.

    October 16, 2011 at 4:50 pm | Reply
    • Guest

      Well put Marek. The answer to Europe's growth problem is Turkey. Sooner or later they will realize that.

      October 16, 2011 at 5:40 pm | Reply
    • angela

      Turkeys economy is growing rapidly but 60/100 of population cannot never eat meat or chiken or buy new clothes. We dont need such <>.

      October 17, 2011 at 7:07 am | Reply
      • ferd

        ohm, where did u get those numbers from? politicians opposing turkeys membership to EU? try reading the real stuff rather than made up news!

        October 18, 2011 at 5:08 am |
  18. leecherius

    Just as in life , when growth stops , death starts.

    October 16, 2011 at 4:52 pm | Reply
  19. faisalrq

    sending manufacturing and services jobs offshore will create more unemployed people at home which wont help economy in anyway and eventually your service providers will have so many surplus reserves of your currency that you will have to up price to make them do work for you. More appropriate solution would be to balance it with similar operations at home but ofcourse that wont be able to feed the corporate greed.

    October 16, 2011 at 4:55 pm | Reply
  20. ty

    increase in population is not synonymous to ecomic growth

    October 16, 2011 at 4:58 pm | Reply
  21. Billy

    Anyone looking to learn more about Europe's situation should read Mark Steyn's "After America". It leans a little to the right and goes into more than just Europe but it does a great job of explaining Europe's Economic (and cultural) decline and the dangers of America following that path.

    October 16, 2011 at 4:59 pm | Reply
    • mike

      Yes. That book is worth reading. But as nations we're doing nothing about it.

      October 16, 2011 at 5:06 pm | Reply
  22. Descarado

    How about an overwhelming immigrant class that shops the European social systems for the best deals and arrives at their doorstep without any vision or ambition and just sucks money out of the host country without contributing anything?

    October 16, 2011 at 5:01 pm | Reply
    • Jibney Mourland

      Which groups, my friend? Evidence?

      October 18, 2011 at 6:11 pm | Reply
  23. Brenda

    Liberals like Zakaria fail to admit it is because 1) High TAXES, and 2) LIBERAL SOCIAL PROGRAMS that cause people to not expand business and lowers worker productivity. THIS IS WHAT NANCY PELOSI WANTS FOR US. Liberals aren't smart enough to get it. If the gov't takes care of us, why would we want to be productive, work super hard to build a business, or anything else. NANNY STATE HERE I COME.

    October 16, 2011 at 5:04 pm | Reply
    • rob

      Yea right!

      I suppose 31 years of Reaganomics and Trickle Down, 8 years of Bush, and 5.5 years of Repugnant Obstruction had nothing to do with it?

      October 16, 2011 at 5:43 pm | Reply
      • Appalled

        Don't forget Barney Frank, Chris Dodd and the Community Reinvestment Act.

        October 16, 2011 at 5:45 pm |
      • Shannon

        Appalled, we did forget that, because everything you mentioned are Tea Party urban myths. Barney Frank and the CRA had nothing to do with the financial crisis.

        And considering that "socialist" countries like Canada, Germany, and France are currently outperforming the US kind of blows your "the problem is socialism" theory out of the water.

        October 19, 2011 at 4:01 pm |
      • Edinatlanta

        You're right. the only thing that trickles down is the s#$t that the oligarchs want to trickle down. Which is their s$&t.

        November 11, 2011 at 11:16 am |
    • mdmooser

      I don't always agree with Zakaria but he is trying SOMETIMES, NOT ALWAYS, TO JUST ADDRESS PROBLEMS WITHOUT MINDLESS DYSFUNCTIONAL BLAME AND GUILT LIKE YOU . Brenda you should unplug your mind from the FOX newsfeed and BS. Zakaria a liberal? is reality liberal or conservative? DUHHHH! Get a life and something besides bs hatred tearing a country down instead of looking what can be done. From negative small minds come stalled no growth hatred, not positive growth.

      November 12, 2011 at 6:53 pm | Reply
  24. jch

    The author convieniently ignores that the real problem is uneqal distribution of wealth. When the middle class and poor do not have money to spend the economy cannot grow. He mistakenly thinks that economic growth is created by taking away economic components that create demand, such as higher high wages, a comfortable retirement, The reason for the lack of growth is that too few people control too much of the wealth and it just sits in non productive financial instruments. The underlying problem that the trickle down theory of economics completely ignores the fact that in the U.S. each dollar spent creates over 1.5 dollars in economic activity, down significantly from pre trickle down era, but still the key driver of the economy. Spending is how growth is created!

    October 16, 2011 at 5:04 pm | Reply
    • mike

      Growth cannot be created when wages are too high. Why would I pay a high wage to a lazy Westerner, when I can get better output from an ambitious Chinese? Why is comfortable retirement a goal? I'm planning to work until I can no longer do so. As Westerners we have forgotten that most people in this world, (and some "rich" included), don't retire and don't take vacations.

      October 16, 2011 at 5:11 pm | Reply
      • Eli

        I don't understand anyone who thinks lowering the wages of westerners is a good idea. While it has some merits if one looks at only certain statistics, the truth is if you cut the ability of Westerners to spend, who the hell is going to buy the rich people's products?
        The purchasing power of China is going up, but their per capita wealth is not close to the western powers wealth. You cannot expect a capitalistic system to work without giving a percentage of the world the power to buy products.

        October 16, 2011 at 5:32 pm |
      • Appalled

        China is a bubble. It's going to pop some day. Most of the workers who build our I-phones and high def TV sets can't afford to buy what they build. They aren't even allowed to move their families to the towns (if you want to call them towns) where they work. And if they complain, they're thrown into jail by the authorities.

        The workers' paradise has been built on weak and shifting sand.

        October 16, 2011 at 6:04 pm |
      • jch

        Mike:
        Congrats on being able to recite nonsensicle talking points, but you did not address my main point. For every dollar spent in the U.S. economy, it creates at least 1,5 dollars in economic activity. If people are not spending money the economy cannot grow. You need to take an economics class. Trickle down economics does not work. Good luck with that.

        October 16, 2011 at 8:36 pm |
      • pat carr

        Well go ahead and live your boring, meaningless life as you see fit. perhaps there's a sweatshop for you somewhere.

        We still take vacations and hope for some kind of small retirement. It's called pursuing a real life.

        November 11, 2011 at 1:03 am |
      • Willy Loman

        I think Pat hit the nail on the head. Mike, your life sounds like a pointless and miserable existence.

        November 11, 2011 at 2:51 pm |
    • jch

      Mike:
      Congrats on being able to recite nonsensicle talking points, but you did not address my main point. For every dollar spent in the U.S. economy, it creates at least 1,5 dollars in economic activity. If people are not spending money the economy cannot grow. You need to take an economics class. Trickle down economics does not work.

      October 16, 2011 at 8:34 pm | Reply
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