Plagued By Bad Governance, Europe Is Losing Its Shirt

By: Rachel Marsden

PARIS -- As I arrived back home via Charles de Gaulle Airport this week, my taxi was caught up in an Air France layoff-announcement protest in which some executives literally lost their shirts when they were mauled by a mob of angry proles. Granted, this was still more civil than the days when the guillotine resolved disputes between the elites and the masses.

As I sat there in gridlock, I had plenty of time to wonder: Although the guillotine at the Place de la Concorde has been replaced by the benign Obelisk of Luxor, and the monarchy traded for a democratic republic, why is public anger in France still expressed so brazenly?

The answer has long been the same: bad governance. And it's not just a problem in France; it's a spreading worldwide trend among developed nations.

In principle, voting is supposed to take the place of head-chopping and shirt-ripping. The problem in France is that there is a constant tug-of-war between the elites and the people -- with the pressure increasing on both.

Globalization has not only erased the borders within Europe, but also the ones between continents. The countries of Europe needed to better compete with the rest of the world, so they created the eurozone, which just made things worse by adding yet another clunky bureaucracy to those of the individual member nations.

The idea of Europe as a trading bloc stemmed from a common desire to project strength and to actually make the individual members stronger. Except that nothing happens in Europe without much talk and time -- which ultimately results in weakness.

Europe's borders have been weakened. Some European countries have been squabbling over the reinstitution of border controls to curtail the onslaught of Middle Eastern and North African migrants. A "migrant summit" between EU ministers and Middle Eastern leaders (more talking) is taking place this week even as the security and economic threats grow.

Foreign policy has been compromised. Russia, a non-EU state, moved quickly into the Middle East in an effort to wipe out the Islamic State, while the EU, by contrast, has been all over the map in trying to address the problem. France is ignoring the fight in center ring: While Assad has his hands full with the fight against the Islamic State, France is launching an investigation into whether Assad has committed war crimes.

As if eurozone demands aren't enough of a burden, French companies must now battle competitors who have the advantages of cheaper labor, fewer regulations and lower taxes. Some French multinationals have chosen to relocate manufacturing centers and outsource customer service to those cheaper markets.

Meanwhile, French citizens are dealing with a job shortage while still having to absorb the French cost of living, which includes being squeezed for exorbitant taxes to pay for all those public services and social safety nets, and also for maintenance of the European Union itself.

Complexity doesn't equal sophistication. In fact, the opposite is true -- just ask an engineer. The iPhone is sophisticated precisely because it's so simple. With Europe having become grossly unsophisticated, it's fitting that people have started behaving like barbarians.

Europe needs to find ways to untangle itself from its state of overregulation. Corporate executives should stand up to elected officials and push back against disadvantages imposed on their companies. Elected officials must focus on creating a level playing field. Any transaction that results in a net gain for another country should necessitate an offset agreement. In other words, if a French business injects billions into a foreign economy where labor is cheap, that country should have to make a commensurate investment in the French economy.

This isn't a new concept. The offset market has long existed in the realm of military and defense contracting. Canada can't just give a contract to a U.S. defense contractor, for example, without reciprocal guarantees for the Canadian economy. This is one thing that Europe's bureaucracy could easily manage and make transparent. Unlike fiddling with carbon credits, this is actually useful and tangible.

Ensuring that losses are balanced by gains would go a long way toward repairing the perception of Europe by its own citizens, who increasingly feel as if their governments exist to exploit them rather than to serve their interests. It may also save a few white-collared executive dress shirts.