What does all this add up to? Less European influence in the world. Europe's position in institutions like the World Bank and the IMF relates to its share of world GDP. Its dwindling defense spending weakens its ability to be a military partner of the U.S., or to project military power abroad even for peacekeeping purposes. Its cramped, increasingly protectionist outlook will further sap its vitality.
The decline of Europe means a world with a greater diffusion of power and a lessened ability to create international norms and rules of the road. It also means that America's superpower status will linger. Think of the dollar. For years people have argued that it is due for a massive drop as countries around the world diversify their savings. But as people looked at the alternatives, they decided that the chief rivals, the euro and the yen, represented economies that were structurally weak. So they have reluctantly stuck with the dollar. It's a similar dynamic in other arenas. You can't beat something with nothing.
On the other hand, Theodore Dalrymple over at Cato Unbound [here] takes a more balanced approach, noting that relative decline has been accompanied by absolute gains in prosperity. He writes:
Doom or further decline is not inevitable, however, though avoidance of it requires active effort. The auguries are not good, not only because of the political immobilism that elaborate systems of social security have caused in most European countries, but because of the European multinational entity that is being created against the wishes of the peoples of Europe (insofar as they can be gauged)....Both articles identify the main culprit as a cultural obsession with social security. The question is whether or not European culture can mobilize sufficient political will to wean itself off the welfare state. Perhaps the current challenge from Islamist radicalism will provide a spur to that effort. Maybe the Islamist crazies will make enough trouble to wake up the European sleepwalkers. There are some encouraging signs. Voter repudiation of the EU constitution was a welcome first step toward continental revival.
Doom is too strong a word, in my view; I think it would be more accurate to say that Europe is sleepwalking to further relative decline. But we should also modestly remember that the future is, ultimately, unknowable.
A cautionary note: Given the experience of the past century, maybe it's better that Europe continues to doze.