欧洲大陆很多国家目前的形势都很差。确实，人们的总财富没什么变化，投入博物馆、公园和其他公共设施的社会资本也没有受到影响。然而，在西欧，经济现状令民众感到失望。
推动少数族裔和年轻人参与到经济中来（这是他们维持自尊并融入社会的基础）的措施比任何时候都更为匮乏。这些群体里真正参与经济活动的人中，成功人士减少了。自1995年以来，欧洲几乎所有国家的工资率增长都在稳步放缓，可见经济在衰落。问题出在哪里？
欧洲经济学家谈到了南欧丧失竞争力的情况。他们表示，相对于过去的趋势水平，产出和就业放缓了，因为薪资涨幅超过了生产率增幅，这让劳动力成本变得过于高昂，并迫使企业裁员。一些持这种看法的德国经济学家主张，那些受影响的经济体必须让工资下降。还有一些经济学家则建议采取货币刺激手段——例如央行的资产购买举措——以提高物价并让目前的工资率水平变得合理。
这有助于解释上一个10年里意大利、希腊和西班牙的男性就业比例为何会下滑。但这种解释引发了一个问题。欧洲的就业人口比率曾出现更大幅度下滑，比如上世纪70年代在德国和意大利，八、九十年代在法国，就业率都出现了大幅下滑。这些下滑是否也是薪资不合理引起的？如果是这样的话，我们为什么没有看到薪资回落？
古典学派的经济学家将就业率下滑以及产出放缓主要归咎于劳动力供应减少。他们认为这种减少在很大程度上是由于财政挥霍——欧洲从上世纪90年代中期到二十一世纪头十年中期就出现了这种情形。
在希腊、意大利还有法国（后者程度较轻），不可持续的减税和支出热潮放大了家庭对个人财富相对于薪资收入的预期。政府还增加了福利，这提高了人们对于社会福利水平相对于自身收入水平的预期。欧盟(EU)的结构性基金（将资金转移到较贫穷国家）更是火上浇油。财富的增加使得很多员工缺乏卖力工作的动机，因此企业的生产成本上升。
凯恩斯(Keynes)的门徒——他们关注总需求——将家庭财富增加等同于就业增加，因为他们认为这增加了消费者需求。他们表示，如果要降低失业率，欧洲需要更多的财政“挥霍”。一些证据支持古典学派的观点。
然而这场辩论的双方都忽略了一个发挥关键作用的因素。欧洲深度衰落——体现在包容度、就业满足感以及工资增长等方面——的主要原因是生产率的剧烈放缓，这始于上世纪90年代末，影响到欧洲大陆很多地区。它阻碍了工资率增长，抑制了就业。
这种放缓源于创新减弱。即便在战后时期，欧洲的创新状况以过去的标准来看也是疲弱的。上世纪60年代，创新再次减弱，因此在利用创新进一步促进生产率增长方面，欧洲在很大程度上依赖美国。但在上世纪70年代，美国创新局限于硅谷而整体减弱。欧洲可以吸收利用的美国创新与过去相比大大减少，导致90年代末欧洲大陆生产率放缓，这种情形后来波及到德国。
除了始于上世纪90年代的衰落，在此次金融危机之后，欧洲很多国家还在受到低迷影响。这种低迷将会过去，但衰落却不会轻易结束。欧洲大陆正在流失大量优秀人才。它必须为创造一种有价值的经济生活而奋斗。
Much of continental Europe is in poor shape. True, the aggregate wealth of people is little changed and the social capital in museums, parks and other amenities is still intact. Yet, in the western part, the economy is failing society.
Inclusion of ethnic minorities and youth in the economy — the backbone of their self-esteem and social integration — is more lacking than ever. Among those who do participate, fewer are prospering. It is a measure of the decline that, in almost every country, the growth of wage rates has steadily slowed since 1995. What has gone wrong?
European economists speak of a loss of competitiveness in southern Europe. They suggest that output and employment are down, relative to the past trend, because wages leapt ahead of productivity, making labour too expensive and forcing employers to cut back. Taking this perspective, some German economists argue that wages need to fall in the affected economies. Others argue instead for monetary stimulus — for instance, asset purchases by central banks — to raise prices and make current wage rates affordable.
This helps explain why the proportion of men who are in employment declined in Italy, Greece and Spain over the previous decade. But the explanation raises a question. Europe has witnessed bigger drops in the employment-to-population ratio, which fell precipitously in Germany and Italy in the 1970s and in France in the 1980s and 1990s. Were those declines also caused by wage misalignments? And if so, why have we not seen wages draw back?
Economists of a classical bent lay a large part of the decline of employment, and thus lagging output, to a contraction of labour supply. And they lay that contraction largely to outbreaks of fiscal profligacy — as happened in Europe from the mid-1990s to the mid-2000s.
In Greece, Italy and, to a lesser extent, France, unsustainable tax cuts and spending sprees added to households’ estimates of their private wealth relative to their wage income. State benefits were expanded too, which added to people’s estimates of their social entitlements relative to their income. The EU’s structural funds, which transferred money to poorer countries, fuelled the fire. Bloated with wealth, many employees had weaker incentives to perform well so companies’ costs of production went up.
Disciples of Keynes, who focus on aggregate demand, view any increase in household wealth as raising employment because they say it adds to consumer demand. They say Europe needs a lot more fiscal “profligacy” if it is to bring unemployment down. Some evidence favours the classics.
Yet both sides of this debate miss the critical force at work. The main cause of Europe’s deep fall — the losses of inclusion, job satisfaction and wage growth — is the devastating slowdown of productivity that began in the late 1990s and struck large swathes of the continent. It holds down the growth of wages rates and it depresses employment.
That slowdown resulted from narrowing innovation. Even in the postwar years, innovation in Europe was feeble by past standards. In the 1960s, it slackened again, leaving the continent largely dependent on America for new ideas that would generate further productivity growth. But in the 1970s American innovation, confined to Silicon Valley, waned in the aggregate. The pool of past American advances on which Europe could draw would narrow to a trickle and lead to the productivity slowdown on the continent in the late 1990s and which came later to Germany.
In the aftermath of the financial crisis, much of Europe is still suffering a slump on top of its post-1990s fall. The slump will pass but the fall will not be easily overcome. The continent is haemorrhaging its best talent. It needs to fight for an economic life worth living.
