Euro Mode Is Still Dependable

September 1, 2014
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For many years, economists and politicians in USA and China criticize that European mode of economy is a barrier of innovation in industry. They believe that over fair distribution of fortune and embracing social welfare has corrupted the passion of creating their own business and products.They claim American mode is stimulating more people create their own enterprise and innovated products to influence the worldwide technological trend. The mode of USA, means less social welfare compared to European mode. Additionally, American teachers, schools and media are more professional and active on discovering new talents. It seems all these features in USA make the country more creative than Europe, a continent full of rich social welfare. However, Euro mode actually become the generator of its industrial innovation rather than a barrier. To some extent, USA mode should tilt a bit to Euro mode.

USA has contributed to the global industry, especially weapons and IT, with the products created by large number of companies. But one thing has to clarify that a certain portion of the products "created" by USA were indeed created in Europe. For example, the largest internet companies are in California but WWW itself was invented by a British in 1990s. Ford and GM used to be the largest auto manufacturer, but car was invented by a German in late 18 century. Lockheed Martin may produce the most advanced missile but missile itself was produced in Germany in WWII. Same deeds like these indicate Europe is not a place without motivation. USA, a creative place in common mind, is more absorbed in commercializing creative ideas than invent things itself to some extent.

But why a place with entire social welfare tend to be still creative? People in Greece, Spain, Cyprus, and Portugal are lazy because of social welfare, but Germany, France, Netherlands, Switzerland, Austria and northern Euro countries are the most advanced industrial countries in the world. Each year, the most wonderful industrial component and products come out of these countries. And all of them are equipped with welfare from cradle to grave! The reason lies in the comparison between these advanced countries and southern Euro countries.

Firstly the crisis of southern Euro countries was not arisen by welfare. Countries like Greece, Spain and Portugal are not developed industrial countries compared with middle and northern Euro. After 21st century, there countries have been interested in playing financial games with banks in the UK and the USA. Before 2008, global capital market was able to pour a large quantity of money into banks in southern Euro countries and sustained their highly social welfare. What they did was just following the steps of USA banks. In a country without industry, they could earned a lot without innovation in products and companies. When tsunami came after 2008, all bubbles exploded and the countries sustained with capital fell down. The financial achievements before 2008 had driven the people away from products creation. Over capitalization corrupted the innovation ability of the country because they didn't need to create.

On the contrary, welfare in middle and northern Euro countries even becomes the insurance of creation. It is well known Germany, Switzerland run famous banks such as UBS, Deutsche Bank, Zurich Financial and Allianz etc. But the major business of these financial organizations are not playing capital games but serving real economy including industry and basic manufacturing. Each year, products from these countries earn most income for them. The main support of the countries' income and social welfare is the profit of their products. Thus, people in these countries have the tradition to be innovative in industry. The perfect social welfare indeed protect them not to be so poor if their new product is a failure. Consequently, for a country sustained by real economy, social welfare is even a generator of innovation.

The set of comparison obvious tells that the countries embraced by total capitalization is the root of lazy. If the government takes more care on real economy, comfortable social welfare can motivate more innovation, regardless the failure. Euro mode of middle and northern European countries is a paradigm for the UK, USA, Canada and also new booming countries like China and Brazil. This mode with combination of ample manufacturing and social welfare is the most dependable economic mode.

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