I could have started this notebook with my own personal reminiscence. Back in the late 60s, when I was still in high school, I visited London and by St. Paul 's Cathedral noticed a massive bomb crater from the blitz that was being used as a parking lot. It was both an unintended memorial to World War II and indictment of Britain's inability to reorganize its economy almost a quarter of a century after the war's end. When I moved to London in 1985 the bomb crater/parking lot was still there. It didn't disappear until the late 90's.

All three of these stories lead easily into a discussion of what Europe is and isn't. Europe is an idea whose physical reality is all around, but whose citizens don't know it. The roads, the infrastructure, and, in the center of the continent, the money all come from something called "Europe." But Europe is a confusing place. Its headquarters is in Brussels but its parliament is in Strasbourg. It has no heart, despite what Tony Blair says, because that metaphor cannot be applied to a process of peaceful national integration without parallel in human history. The upside is no wars have been fought in Europe since 1945. The last fascist dictatorships in the western part of the continent -- Spain, Portugal, Greece -- have been eliminated without bloodshed, and these nations converted into stable, free-market economies. And, although American conservatives claim all the credit for the collapse of communism, the former Warsaw Pact nations would also credit the European Union for it eventual emancipation from Russia. These countries have easily fitted into the E. U. because they were watching it with envious eyes for so long.

Europe is a place where pacifism has become almost encoded in its citizens' genes. You don't have to be that old -- I'm not -- to have seen the ruins left from the last conflagration; or, just as likely, some ugly, modern buildings in the middle of a row of pretty, older ones, an equal marker of the last war. Those ugly buildings everyone knows are built on a former bombsite. Of course, this deep reluctance to use force has its downside. As Yugoslavia disintegrated, if the E.U. had voted to use force to stop ethnic cleansing in Bosnia perhaps 200,000 people wouldn't have been murdered and several million not displaced from their homes. But the scars of war run deep and two, coming up on three, generations of Europeans have been born without knowing the sound of conqueror's boots tramping through the village or the low rumble rising to a roar of planes coming over the horizon to drop tons of ordnance in your fields and on your streets.

To stave off the economic causes of most wars, an unwritten social contract has been agreed throughout Europe: in return for high taxes the state will provide services and cash benefits that will smooth out the inevitable inequalities arising in a free-market, capitalist economy. That's why John Ydstie noted that middle- class folks seem to live better in Europe despite the taxes. The cash benefits come back to them at key points throughout their lives. The progressive tax rates smooth out the income gap between richest and poorest, which mitigates to a certain degree the social problems associated with the have-nots in capitalist societies.

Which brings me to another story I could have told to start this notebook but I'll end with it instead. The down side to high tax regimes funding large welfare states in Europe is that taxes take dynamism out of the economy. It's not just ideological conservatives in Washington who say so. Over the years I have been a reporter in Europe I have done a number of stories about persistent high unemployment in France (I could have done the same reporting in Germany). With around 10 percent of the population unemployed at any one time, it is always amazing to an American that the country doesn't descend into violent anarchy. I ask you to think about what would happen in the U.S. if there was a decade where one in ten people had no work. Think of the violence endemic in discrete, persistent areas of high unemployment like the inner city. But in France there was no social breakdown. Why? The social safety net works for executives as well as assembly line workers.

Back in 1994 I visited an industrialist in the Paris suburb of St. Denis. He was an informal adviser to then Prime Minister Jacques Chirac. This fellow operated in a growth industry: manufacturing clothing for toxic waste clean-up. He had two factories, one a 100 miles west of Paris and another in Orange County, California. He outlined the difference for me in operating on two continents. In America, if he had a big order, he could hire workers as he needed them and when the order was filled he could let them go. In France, if he had a big order he still couldn't hire workers because the employer's taxes he would have to pay plus the rights workers have against dismissal made it prohibitively expensive to create new jobs. Then he added, "but in the U.S. I need a bodyguard to escort me to my car, because the violence in the area where my factory is located is extreme. But in France, I go everywhere on my own without fear." Which did he prefer? "As a businessman I prefer operating in the U.S. As a citizen, I prefer living in Europe."