Fear and Loathing

BRACE FOR THE DELUGE, the newsweekly Der Spiegel recently warned Germans. A wave of modern-day "serfs" is heading your way. Migrants from Poland and the Czech Republic--working for as little as 3 euro an hour, one third the standard wage--are coming to steal jobs from hardworking Germans.

Far-fetched? You bet. But there's no denying that Der Spiegel has its finger on a nervous nation's pulse. Last week the official number of jobless Germans reached an astonishing 5,216,000, or 12.6 percent, deepening an already palpable national angst. A new survey by the Consumer Research Group in Nuremberg finds that 77 percent of Germans worry about unemployment--a European anxiety record. With joblessness on a scale not seen since the 1930s, newspapers are replete with fraught references to Weimar, and to the economic chaos that engendered Hitler.

Overblown or not, Germany's state of fear is real--and so are its consequences. Worries about unemployment are a big part of the reason behind a three-year fall in consumer spending, which in turn dampens growth and kills jobs. Labor unions have begun to play on fears of those "serfs" from the east to bolster their bargaining clout and stem a shrinking membership, down from 12 million in 1991 to 7 million today. Never mind the truth, that much of the hard work in Germany's slaughterhouses--the focus of Spiegel's "expose"--has long been done by foreigners, or that migrants cause an insignificant part of the jobless total. More important is how the jobs scare threatens the European Union's next step toward integration. Citing unemployment and lackluster growth, Chancellor Gerhard Schroeder last week joined France and Belgium in putting the brakes on the planned opening of Europe's market for services.

That's a big deal. The European Commission's "services directive" is the centerpiece of EC President Jose Manuel Barroso's drive to boost Europe's competitiveness. It would cut red tape and eliminate special protections that prevent businesses and professionals from offering their services all across the Continent. Architects and engineers, plumbers and nurses would no longer face complicated hurdles to working in other EU countries. The boost in competition and trade would create between 600,000 and 2.5 million new jobs, according to Britain's Malcolm Harbour, a member of the European Parliament, and boost economic growth by as much as 2 percent.

Europe's labor unions, professional associations and many industry groups oppose the plan. Seeking to preserve the cozy status quo, they are exploiting citizens' legitimate fears of poverty, uncertainty and, most obviously, of faceless foreigners coming to steal their jobs. And it's true: some people would lose their jobs, including some German meatpackers. Yet economists argue that in the long run more jobs would be created, even in high-cost Germany, just as they were in 1988 when Europe created a single market for manufactured goods--amid many of the same fears as today.

The difference is that, this time, the naysayers seem to be winning the day. On March 19 in Brussels, unions will hold their first major transnational demonstration protesting the EU's services directive. "This fearmongering--and sicking the East and West Europeans on each other in the name of social fairness--is going to cost Europeans hundreds of thousands of jobs," predicts Ann Mettler at the Lisbon Council, a pro-reform think tank in Brussels.

As she and other progressives see it, a renewed phobia of Easterners and other immigrants threatens to take hold at the very moment when slow-growing and rapidly aging countries like Germany should instead be thinking about how to attract capable and hardworking newcomers. Worse, fear of the future, expressed in fear of change, breeds lethargy and stagnation, warns Thomas Petersen, from the Allensbach polling institute. "People lose their drive," he says. "The power and energy of a country go down." Just worrying about unemployment, he suggests, makes people less likely to begin new ventures, whether in business or their private lives. His advice to angstful Germans--or French and Belgians? Get a grip. And push your politicians to not delay tough policies that will ultimately put more people to work.

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