In my continued posting about Jean Jacque Servan-Schreiber’s The American Challenge, written in 1968. We have come to the part in the book where he lays out why he thinks Europe fell behind economically by his time period. We have already seen that American Companies are seen as more dynamic, with higher profits, larger investments, and a larger educated cadre of workers to hire. For all these reasons, Servan-Schreiber claims that rather than being a boon to European business, the 1960s forerunners of the EU such as the EEC (European Economic Community) and others are simply being a boon to America. Now instead of needing to have different branches in each country, an American company can set up a single European branch and export its products to the whole EEC. American companies can take advantage of these efficiencies while European companies, still struggling with lower profits and less educated workforces (says Servan-Schreiber) are outcompeted. In short, Servan-Schreiber says that since the beginning of the EEC, the economic gap between America and Europe has only gotten wider.

One of his greatest laments appears to be a very modern one, that despite the supposed economic union, each European country continues to pursue its own goals and directives completely divorced from the others. The demand for unanimous rather than majority voting means that nothing can be done which is unacceptable to any state, and this means that all controversial problems are shoved to the side while the nations of the EEC continue to do their own things. Even when the nations do try to work together, he claims they spend most of their time arguing to ensure they each get a fair share of the money in the pot, rather than actually trying to get something done. He even claims that despite the common market for European Coal and Steel being the very first of the EU/EEC pan-European institutions, “by 1968, there is no longer a common market for coal and steel.” Each nation is busy protecting its own industries and the capital markets are completely divorced from each other. So a German or French industrial company operates almost entirely within their own nation, while an American industrial company will operate not only in America but in all the nations of the EEC as well, gaining an economy of scale benefit that EEC countries lack.

In short, Servan-Schreiber is a Eurofederalist.

As blithe as that statement may be, it feels an accurate one from my reading of him. He does have some other kooky ideas to be fair, he speaks about a future where each European state commits to specialization in a few areas “in the Sweden or Swiss model,” and to spend their resources prudently in only these areas, but that seems like a fantasy with a bad outcome. If Germany decides to specialize in cars, who’s to say their cars will always be the best? Why shouldn’t German cars face competition from Italian or Swedish cars that are also quite good and have investments from their own governments? But a few kooky ideas aside, his main point seems to be that the current European unity is an illusion, and Europe needs real unity in order to compete with the United States.

In some ways this may be oddly prescient. Remember the earlier chapters in which Servan-Schreiber made dark predictions that America would skyrocket past Europe economically? How Europe would be reduced to a near colonial status while America enjoyed unimaginably higher standards of living? Yeah, none of that actually happened, America and Europe are still close together in economic standards of living. I’m no historian, so I can’t tease out the cause and effect, but how much of this was caused by the EU itself? The EU is after all a Eurofederalist’s dream from the perspective of 1968. A truly common market where selling across borders in Europe is no different than selling across state lines in America. Add to that the prodigious increase in college educated workers that Europe gained during the 20th century, and it seems like perhaps Servan-Schreiber’s dark predictions did not come to pass precisely because Europe took the steps he suggested to mitigate them. It’s food for thought at least.