WHAT HAS NOT GONE RIGHT
The late 1980s were a good time for Europe: growth accelerated, unemployment fell, and dreams of European unity seemed within reach. A mood of almost giddy optimism -- Europhoria -- swept the continent. Even non-Europeans were caught up in the spirit. As late as 1992 the economist Lester Thurow's bestseller Head to Head proclaimed that "future historians will record that the 21st century belonged to the House of Europe."
So in 1987, when the Brookings Institution published a collection of papers entitled Barriers to European Growth: A Transatlantic View, which focused on the syndrome of slowing growth and rising unemployment that had become evident over the previous 15 or so years, many European commentators dismissed the volume as a case of fighting the last war. Europe, they insisted, was on the move; energized by the transition to a single market, it had entered a period of renewed growth and technological vigor.
In retrospect, European elation was, to say the least, premature. The structural problems that underlay Eurosclerosis had not been resolved; they had merely been masked by an upswing in the business cycle. When the next recession arrived -- and there is always a next recession -- it raised unemployment rates not merely to their previous peaks but, in most of Europe, to levels not seen since the 1930s. All in all, it was an object lesson in the difference between cycle and trend: one swallow does not make a spring, and a few good years of growth do not necessarily signal a turnaround in economic fundamentals.
While Europeans may have learned that lesson, Americans have not. Although until quite recently titles like Donald Bartlett and James Steele's America: What Went Wrong? typified commentary about the U.S. economy, and economic journalism was dominated by scare headlines about downsizing, after a mere two years of good news America's mood has become startlingly triumphalist. In the view of many business and political leaders America has entered the era of the