Cover Story -- The New Economy
Commentary: Old World, New Mandate
When it comes to drive and enterprise, few can top Nicolas Taquet. The 30-year-old French biologist wowed colleagues with his work on anticancer compounds. But France's state-controlled medical system was so bureaucratic that Taquet couldn't even get the biological cultures he needed. And a take-home salary of $1,150 per month barely covered his rent.
By last June, Taquet had had enough: He emigrated to the U.S. to work as a researcher at the Baylor Institute for Immunology Research in Dallas for twice the money. Within five months he had a big raise and a promotion. "I'm so motivated here that I work weekends and nights," he says. "That wasn't the case back home."
There's no shortage of technology in Europe and Japan. But to benefit from a New Economy, they have to undergo some deep cultural shifts. What still counts in these hierarchical societies is not what works best, but what disturbs the least.LABOR MAGNET. Western Europe and much of Asia are victims of their own success. Germany and Japan became industrial superpowers in a single generation. France enjoyed les trente glorieuses--30 years of postwar progress. These societies preferred planned economies over freewheeling markets, corporate hierarchies over chaotic startups, and social consensus over economic freedom. When it came to building traditional industries, this model worked splendidly.
But that risk-averse worldview is counterproductive in today's knowledge-based economies. It is entrepreneur-friendly cultures--open to the transfer of knowledge, to markets, and to exploring technology--that thrive today. "Openness really does matter to growth," says Risaburo Nezu, director of science, technology, and industry at the Organization for Economic Cooperation & Development. "And it's not only open markets, but the ability to attract knowledge and people." That's the lesson of Silicon Valley.
It's hard to legislate your way to that when you're up against old attitudes. Europe's monetary unification provides a regulatory basis for a New Economy. But risk remains taboo. There is still little labor mobility. Booming northeast Italy faces an unprecedented labor shortage. Yet just 300 miles to the south, youth unemployment is over 50%. Culture, not economics, explains this: Few want to risk the move. Europe's conservative culture also excludes outsiders, which is why the best grad students of Asia and Africa seek work in the U.S.
That's the bad news. The good news is that change is starting to percolate in these societies, and their cultures will change with it. In Japan and Korea, the old systems based on the keiretsu and chaebol are starting to unravel as open markets and IT work transformative wonders.MARKT CHANGE. In Germany, the hammerlock of Deutsche Bank, Commerzbank, and Dresdner Bank over 60% of industry is eroding. Suddenly, Frankfurt's Nasdaq-style Neuer Markt has become the symbol of German capitalism as the nation shifts from bank-oriented finance to equities. And as information flows become instantaneous, clubby business elites in Europe and Asia are looking like so many tired old men, behind the times.
Even in France, record numbers of graduates of the grandes ecoles, which traditionally turn out the mandarins of the French state, are opting for the private sector. Political leaders such as Socialist Prime Minister Lionel Jospin and Conservative President Jacques Chirac still insist they are maintaining the glorious structure of the state--even as the bricks get carted off.
Europe and Asia have only begun what is going to be a cultural revolution. The outcome is unpredictable. Europe and Japan have vastly more cultural and institutional baggage than the much younger U.S., so it was probably inevitable that change initially would be slower. But change can occur quickly. Europe's cell-phone usage, to take just one example, jumped 35% last year.
All this gives hope to Nicolas Taquet, who loves Dallas but misses France. "When and if it changes, I'll be going back," he says. It may be to a very different France than the one he left.By John Rossant; Rossant, Based in Paris, Is European Regional Editor.