Looking beyond the latest headlines about Greece's debt crisis, the long-term question for the European Union is: Can it grow? The conventional answer is that it's too sclerotic, too socialist, too indebted. Not so.

Germany is the largest economy in Europe, and it's been the first to recover and the best-performing developed economy since the start of the Great Recession. Since bottoming in 2009's first quarter, German output has grown at an annual rate of 2.8%, compared with 2.4% for the U.S. since its bottom in 2009's second...