"Europe has successfully put tariffs on itself". Put the Blame on Mame

In 1946, Allan Roberts and Doris Fisher composed the song "Put the Blame on Mame" for the film Gilda, masterfully performed by Rita Hayworth with the singing voice of Anita Kert Ellis. The song satirized the plight of a woman who was blamed for America's misfortunes, from the Chicago fire to the San Francisco earthquake.

Europeans are now composing the “Put the Blame on US” version to avoid taking responsibility for decades of inaction and for not being prepared for the many foreseeable consequences of the national interest version of Trumpist paranoia.

The following text is an excerpt from the Financial Times article "Forget the US — Europe has successfully put tariffs on itself" by Mario Draghi, a European out of step with Brussels' immobility.

«Recent weeks have provided a stark reminder of Europe’s vulnerabilities. The eurozone barely grew at the end of last year, underlining the fragility of the domestic recovery. And the US began imposing tariffs on its major trading partners, with the EU next in its sights. This prospect casts further uncertainty over European growth given the economy’s dependence on foreign demand.

Two major factors have led Europe into this predicament — but they can also lead it out again if it is prepared to undergo radical change.

The first is the EU’s long-standing inability to tackle its supply constraints, especially its high internal barriers and regulatory hurdles. These are far more damaging for growth than any tariffs the US might impose — and their harmful effects are increasing over time.

The IMF estimates that Europe’s internal barriers are equivalent to a tariff of 45 per cent for manufacturing and 110 per cent for services. These effectively shrink the market in which European companies operate: trade across EU countries is less than half the level of trade across US states. And as activity shifts more towards services, their overall drag on growth becomes worse.

At the same time, the EU has allowed regulation to track the most innovative part of services — digital — hindering the growth of European tech firms and preventing the economy from unlocking large productivity gains. The costs of complying with GDPR, for example, are estimated to have reduced profits for small European tech firms by up to 12 per cent.

Taken together, Europe has been effectively raising tariffs within its borders and increasing regulation on a sector that makes up around 70 per cent of EU GDP.»