If not Brexit, migration, or populism, what are Europe’s three biggest challenges?
It’s not that these issues do not matter, but the attention devoted to them is all out of proportion. Meanwhile, three changes are going to upend the way we work and live and revolutionize the relationship between the state and the individual. These are climate change, aging populations, and digital revolutions—the “Big 3,” as we call them in a new Carnegie Europe report.
Their effects are going to require Europeans to adapt in ways that we are only beginning to understand. The Big 3 will also have a domino effect. For example, if climate change makes parts of Europe uninhabitable, or if automation causes upheaval in labor markets, migration both within and into Europe will likely go up. The EU needs to do all it can to manage the transitions, which have already begun.
How can the EU overcome the current political paralysis to shift its priorities?
The EU is devoting some attention to the Big 3, but arguably too little and too slowly, partly because its leaders’ attention is elsewhere. Most mainstream parties are also running out of ideas. Voters sense that, and are being lured away by populist narratives.
Prioritizing the Big 3 could change the debate and lead to a more positive vision for the EU. And the timing is right, with new EU leadership taking office this year and citizens, especially youth, demanding radical change. But to put a new vision in place, the EU will need to redirect its resources and policies and make a clear argument to explain why it is adjusting course.
What actions should the EU take?
Out of the three, the EU has devoted the most attention to climate change, and with some success. But we argue that the current approach—essentially “greening” the current economic model—will not work. Even if wealthier societies ditch single-use plastics, for example, they cannot keep growing without creating an unsustainable impact on the environment.
Europeans should focus on well-being instead of growth, primarily by using fewer but higher-quality products and getting more mileage out of them. Reducing consumption is essential to building a sustainable, low-carbon economy.
One way the EU could ease this transition is to lead an overhaul of the tax system. Taxation should shift from focusing on income generated by labor to focusing on incentives for businesses and people to cut carbon emissions, use renewable energy, and build and use clean products and infrastructure.
The demographic change is going to be tough to tackle. Barring a large inflow of migrants—which many European voters have repeatedly shown they do not want—safety nets will run out of money. This is because the number of working-age people, who pay into the schemes, will shrink relative to the number of retirement-age people. Also, robots will take many jobs currently performed by humans, further eroding tax revenue.
People will likely need to work later in their lives and continually re-educate themselves to gain new skills that suit a changing labor market. Unemployment schemes, such as the European Fund for Transition, should be revamped to better support workers as they move between jobs and to reward caregivers and volunteers as populations age.
Of course, each country will be affected differently. That is why the EU has a vital role to play: unless people all across Europe use fewer natural resources, and some kind of EU-wide floor is put under job market uncertainty, people will travel en masse out of the most affected countries, putting other countries’ resources and safety nets under stress.
The EU could help, for example, by developing a common energy market and capping resource use. It could also pay into and accredit nonstandard education methods, such as online learning, and possibly create EU-wide unemployment funds.
Lastly, the EU is no slouch when it comes to addressing technological challenges. For example, it has already passed a directive requiring more stringent safety standards for critical IT networks. But the measure is not enough. Further steps are needed to make sure companies comply, such as financial penalties for lax security. The EU must also raise public awareness about digital safety, such as through early education and an EU-wide labeling system on product security. It could also help ensure that safeguards are built into the design of artificial intelligence technologies and could help define and dismantle harmful online content.
How can the EU, national and local governments, businesses, and communities work together?
The encouraging bit is that at the national and local levels, many possible solutions to the Big 3 are being tested and implemented. In France, for example, people earn credit for volunteer work and apply it toward setting up a business or getting training. This is a good model for how to deal with the side effects of automation.
In Germany, numerous energy commons—essentially households or neighborhoods—have pooled their money to buy wind or solar power generators. So many people have done so that these commons now own one-third of all renewable power generation in the country. That is hugely encouraging; it shows that when the EU or states are not acting, communities and businesses are leading the way.
The EU and national governments need to literally watch, listen, and learn. Then they need to connect and support these initiatives through, for example, creating an EU community initiatives fund and developing joint business-community projects.
What sacrifices will Europeans have to make during the inevitable transitions?
A lot of the predictability that governs our lives may disappear. For example, we have to move away from the “take-make-use-waste” lifestyle, in which companies use natural resources to make products that are used once or twice and then discarded. Products may need to last much longer, as they used to in the not-so-recent past. When they break down, it should be easier and cheaper to repair them than to replace them.
This could have a number of second-order implications: not only will the design of consumer goods need to change, but many shops will need to reorient from retail to repair, with the new jobs paying more than the old ones (essentially because repair is more complicated than retail)
What are the risks of not doing enough?
They are huge. Failure to tackle climate change alone could lead to more conflict over resources and further divide states and communities. Failure to prepare health and welfare systems for aging populations could leave many citizens without care. Failure to support people during job transitions could lead to wider income gaps and increased poverty. Failure to tackle the impact of technology on democracies could make it increasingly easier for authoritarian politicians to dominate our societies.
But there are good reasons to be optimistic. Traditionally, the EU has had the convening power and assets to solve problems together. It has been able to draw on the extensive, diverse expertise of half a billion people and make commitments stick.
Could the EU play a lead role in setting global norms? Does it have a comparative advantage?
Yes, it can, and on some issues such as climate change, it must—in the sense that no other power, neither the United States nor China, currently seems willing to lead. If Europe does not lead on climate change and support poorer, developing countries to grow sustainably, the migration crisis could worsen, even if conflict over resources takes place far away.
The EU has a few comparative advantages. The standards it sets for the EU’s large internal market of $20 trillion tend to get adopted by other economies trading with it. It also has a history of setting rules that serve the public interest because no single country controls them, which adds to Europe’s global credibility.
Comments(8)
Excellent paper, as always. Africa will be the continent to watch. Its population will double in a quarter of a century and no infrastructure will be available for these masses, such as schools and jobs. Corruption at the top will remain a serious issue.
Nice campaign by the Greens, but what matters more for Europe is African birth rates, Islamic terrorism, the Chinese expansion and NATO.
This is a very visionary article. Europe has to be very proactive and do better planning of future.
Thomas Valasesek did a very good analysis of what the WORLD has to do not just the European Union. The most efficient and effective solution to the 21st century rapid growth and automation of labor both blue and white collar, global interdependence, terrorism and the global warming that will displace approximately 50% of the world’s population over the next 25 years is ONE 6 YEAR TERM LIMITS for of our elected representatives worldwide. PRODUCTION IS IN THE SYSTEM. Multi terms in office is the problem. The majority of all people (85%), even politicians, who run for office the first time want to do the right things for the common good. with the system as it is with the majority multi term legislators and seniority rule THE POWERS THAT BE own control against the common good. Elections would be every 2 years so 1/3rd of the legislators world be changed out every 2 years so bad laws could be corrected and improved quickly.. Most people educated under the current systems of SCHOOL education without practical experience are followers and do best with good, honest, motivated multi life experienced representatives working out 21st century solutions into the future but serving only ONE 6 YEAR TERM in office. . The payoff is we could have 10 time the standard of living and security worldwide over the next 35 years when we switch to a ONE 6 YEAR TERM LIMITS representation standard starting in the Unites States and working around the world, hopefully the European Union would be second. Even THE POWERS THAT BE will be better off because free people, on a level playing field, produce more, keep more and share more. The alternative is a maximum of 2.5 time increase in economic growth with unending terrorism and ever worse, nuclear contamination.
EU and INDIA need to shake hands in climate action pogramme to impact a wider base of population. may be CHINA would also become ready to lead in climate talks.
Fake news is a favorite construct present more and more in the public discussion, sometimes used by a twiterati whose number of proven incorrect assessments (long for lies) is now more than Xerxes had Immortals. The construct unfortunately applies to the idea that the EU can lead on climate change. In its prime Europe was teaming with Empires permanently at war in a world too small to accommodate them all. Young, growing populations, were escaping a continent to colonize the world, and history shows brutal appropriation of anything, from Africa to South America, from India to China. In the twisted logic of human societies change (can’t call it progress), those appropriations have fueled technological progress which has been now fully mastered by the Rest, especially India and China. This is where the human component of climate change has already been decided decided, people there will increase consumption, the battle is lost. The EU should, but will not, help the former imperial playground Africa. The EU simply doesn’t have the resources, its form of capitalism devolved from Adams to Friedman, as Picketty demonstrated. In its present form of distribution, the EU capitalism made children unaffordable. Obviously, this is just a part of a complex discussion, but on another dimension, capitalism will never accept “higher-quality products and getting more mileage out of them”, an exceptional idea offered by the author. The author challenges capitalism to find solutions by the introduction of a broad spectrum of taxes, exceptional in its scope. It will not work; Gates wants to make money by injecting sulphur in the atmosphere, an idea as solid as the security of the Windows OS. In fact, Malthus and the Club of Rome wrote a long time ago the history of the future, and capitalism, the only functional economic system might have found technological solutions; add to that a less Darwinian meritocracy convinced that whatever they made they can keep, and by now nuclear fusion could have been operational. What the Europe could have done a long time ago is abide by her banning of war, abide the Briand-Kellog treaty. Even now huge amounts of resources are allocated to war preparations, war that any scenario indicates will be nuclear (watch the documentary “Threads” on YouTube). The paradox is that the nuclear winter will solve climate change, if that can be called a solution. Eons later, radiation will subside, and hopefully Gaia’s next attempt will produce an intelligent species.
What absolute blather. So when exactly are parts of Europe supposed to become uninhabitable and how likely is it? Give me any answer other than 'I don't know' and I'll call you a liar on both. Automation is a problem but its actually part of a problem and not THE problem - employment is the real problem. Specifically large unemployment and way too many working for way too little, meaning eventually no one will be able to buy the baubles marketed and the system collapses. Unsustainable debt, a disconnect and distrust between govenment and governed, aging populations and un(der)funded entitlements, etc are real issues NOW.
The energy component of your solution to Europe's problems will not work. It cannot abandon nuclear electricity in favor of wind, solar, and biomass, as Germany is attempting to do at great cost and total ineffectiveness. 80% of wind and solar capacity is actually filled by burning something: coal, gas, or (frequently American) forests. This approach is silly.
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