The Axis of Losers
The countries that do not support us have terrible
economies.
By Kevin A. Hassett


On March 14 German Chancellor Gerhard Schroeder
delivered a much-anticipated speech outlining his
latest plan to rescue the German economy from the
doldrums. The speech was an impassioned appeal to
continue to defend German workers against the
evils of capitalism.

«Our country has not,« Schroeder said, «become
economically strong through the law of the jungle,
through indiscriminate hiring and firing.« Indeed,
to Schroeder´s eye, there is hardly anything worth
cutting, right down to the generous dental
benefits. «I do not want to return to an era when
you can judge someone´s wealth by the state of
their teeth,« he observed.

It is wholly appropriate that such a speech could
be delivered at the height of the tension between
Germany and the United States, for the content of
the speech explains better than anything the
surprising intensity of the opposition to the U.S.
from «Old Europe.« President Chirac, after all,
has paraded around the world actively recruiting
opponents. His smug and malicious actions could
hardly be more brazen if he were militarily allied
with Iraq.

So the question naturally arises, why do they act
as if they hate us? Schroeder´s speech provides a
glimpse at the answer. Indeed, an analysis of the
economic philosophies of these nations suggests
that something more deeply rooted in the struggle
between left and right is at the core of this
conflict.

Europe is undoubtedly currently divided. Some
countries — the U.K. and Spain come to mind —
support the U.S. while France, Germany, and
Belgium do not. What do those who oppose the U.S.
have most in common? That question might arouse
hours of debate amongst political scientists, but
not economists. There is a striking and
significant difference between countries that
support us and those that do not. The countries
that do not support us have terrible economies,
and have had terrible economies for a long time.
Weasels they may be, but "axis of losers" may be a
more precise moniker.

The facts are striking. For the last decade for
which there is complete data, the average annual
growth rate of real GDP of the western European
countries that support us is about 3%. The average
annual growth rate of those that do not is just
1.9%. For 2002, the average unemployment rate of
those countries that support us is 6.1%. The
average for those opposed is a lofty 8.1%.

What explains the large differences? Two factors
stand out. First, our opponents have enormous
governments that on average consume 46.4% of GDP.
Our supporters have governments that are on
average 15% smaller. Second, our opponents have
highly regulated economies and governments that
are close to large and extremely influential labor
unions. In Schroeder´s Germany, for example, an
unemployed worker can probably sue if he is fired,
and receives unemployment benefits for 32 months
after that. No wonder the unemployment rate is
above 11%.

Perhaps the most remarkable thing about the
economic stagnation of the axis of losers is that
it could endure for so long and not create
political turmoil. This has been accomplished by
repeated descriptions of the terrible fate
awaiting the unjust capitalist states. As clearly
evidenced by Schroeder´s speech, Old Europe
embraced the view of capitalism formulated by
Italian marxist Antonio Gramsci. Gramsci viewed
liberal democracy and capitalism as an edifice
designed to benefit the privileged at the expense
of the oppressed. The privileged control the
oppressed by indoctrination into a belief system
that reinforces the oppression. A key first step
to social justice is the destruction of the
capitalist belief system, to fight the view that
capitalism, as practiced by the Americans, can
ever lead to just outcomes.