There is trouble abroad, and it is not caused by terrorists or communists. It is trouble with those we depend upon most for our security and our interdependent economy -- our European allies.
The trouble in Europe is not neutralism or anti-Americanism but rather the serious economic and technological condition of our closest partners. It provides a disturbing context for the upcoming economic summit meeting in Tokyo in May.
One key element is the persistent high unemployment rates in European countries. The European Community's jobless rate is over 11 percent. Britain and Belgium, for example, are now experiencing 13 percent unemployment, and Holland 15 percent.
More to the point, European economies are not generating jobs at the rate of the American economy -- despite the historically high levels of unemployment that still exist here. According to figures of the Organization for Economic Cooperation and Development, fixed asset formation in the United States grew 63 percent since 1970 and employment grew some 38 percent. In contrast, Japan's increase in assets was 85 percent and just 14 percent for employment. But for Europe, fixed assets grew by only 21 percent and new employment growth was zero.
There are serious danger signals in two other areas. One is education, where Europe is continuing to fall behind the United States in access to higher learning for its citizens. To illustrate the point, in the United States some 72 percent of all secondary school students qualify for entry into higher education. But in the United Kingdom, Germany and France it is only 26 to 28 percent. In Japan, on the other hand, 87 percent of high school students qualify. Similar figures exist for actual entry into university-level education. Yet France, Germany and Britain are talking about decreasing access for their young students to university education! Thus, major segments of Europe's younger population see themselves denied the opportunity to participate in and contribute to productive areas of technological and managerial modernization.
A second indication of decline is the serious drop in expenditure on research and development in Europe. This sector is vital for sustaining innovation and achieving the "cutting edge" of new technologies. Despite such new European Community programs as ESPRIT and EUREKA, Europe's R&D expenditure, as a percentage of GNP, lags behind both the United States and Japan. And while the U.S. figures are somewhat exaggerated because much of America's R&D is generated by the military, these statistics nevertheless indicate an erosion of Europe's technological position. The European Community estimates that the Community's share of OECD high-technology manufactured exports fell from 58 percent in 1963 to 43 percent in 1983.
Europe also continues to suffer from long- standing internal barriers to trade and to the exchange of people and ideas. Despite the Common Market, individual governments and industries still raise nontariff obstacles to imports from other European countries. Another danger is that they are trying to create a protected market that keeps out foreign -- especially American -- industry just when they most need outside capital and technology to compete in a global marketplace.
Some would say that seeing our would-be European competitors falling behind should gladden the hearts of America's entrepreneurs. But not so fast! Europeans are some of our best customers. Europe provides many vital and useful products that keep our own economy moving forward, and we depend on our alliance with them for our security.
The rising protectionist sentiment in Europe is harmful to U.S. economic growth. We are seeing numerous efforts to deny America access to European high-technology defense contracts and to discriminate against U.S. and Japanese vendors of high-technology goods, especially in communications and computers. Such discrimination is not an answer to Europe's employment and economic problems, and begs the real solution.
Europeans, in the end, must take ameliorative action, but increasingly it looks like they may be going in the wrong direction -- less education rather than more; more protectionist, beggar-thy-neighbor policies rather than permitting increased competition, market access and uniform standards across the Atlantic. These ostrich-like moves will only exacerbate the problem. They will also cause serious social and political disruptions dangerous to our common interests. (Witness the rise of the extreme right in France in the last election.)
A better remedy would be to seek common solutions, risk sharing and joint ventures -- public and private -- in high-technology projects that require costly R&D; new effor to retain displaced workers and to increase market access. Above all, a solution to Europe's economic dilemma will require policies that stimulate investment, expand education and encourage innovation, entrepreneurship and cooperation on both sides of the Atlantic.