European Union: RIP – The Lost Generation

As the EU braces for the big “Grexit” – the exit of Greece from the EU, there is hand wringing in Brussels over the immediate impact on the financial systems. Significant problem, true enough – but the immediate is always the enemy of the long term. Even if they can hold it together:

The EU is dead as an economic power for the next 50 years.

Why?

The Marxist policies of the socialist democracies have irreversibly tilted the resources of government toward older citizens by promising things like universal health care, defined benefit retirement payments and other welfare state programs that are far more utilized by the older citizens – the same type of socialist “Utopia” all power hungry statists promise worldwide, including our own current president, his party and enabling “progressive” Republicans.

The EU welfare states have burdened the capitalistic side of their economies with so much cost that they can no longer generate enough cash to cover the bills…and the bills are coming due.

The EU is already a corpse – the bureaucrats just haven’t realized it yet – in reality, they are now just arguing over where to bury the body.

Unemployment in the under-25 groupings are the most important warning signs for any economy. This is true because this is the segment of the work force who are typically less expensive to hire and provide the basis for any economy. Free markets adjust entry salaries to incorporate the lack of experience – essentially  part of what entry level employees receive in compensation is something that is more valuable in the long run – experience. Young people, freshly educated, are the raw material that all economic growth is constructed with and the EU is denying these kids the opportunity to accumulate experiences that will make them more productive later in life.

The chart above shows the desperation of young people in most of the EU countries. This is leading to:

  • A generation of people who are far less experienced in actual work life and more comfortable with not working
  • A generation of underemployed people with no skills in their chosen fields
  • A migration of talent to areas that can/will employ them

There are 4 types of welfare states, with the EU countries that are performing the worst in employment in what is termed the “Mediterranean welfare state“:

The Mediterranean welfare state (Italy, Spain, Portugal, Greece) is characterized by a “rudimentary welfare state”, with a strong internal polarization in social benefits. Although there is no minimum income scheme in Italy, Spain, Portugal and Greece, the retirement benefits for the citizens who qualify are the highest in Europe. There is a class of “hyper-protected individuals” (white-collar workers), but also a large number of unprotected individuals (irregular workers, young people and the long-term unemployed). The degree of state activity in the welfare sector is extremely low and not efficient in reducing poverty at the lower end of society.

This model seeks to create employment at the lower end of the age scale by lowering retirement ages and increasing benefits to incent older workers to leave the workforce earlier – this only encourages more people to leave at the peak of their earning years, lowering taxes drawn into the system and eventually collapsing it when the tax inflow can’t keep up with the benefit outflow. Because of this guarantee, there is no incentive for workers to invest any of their own money in retirement, leaving retirees at the mercy of the respective governments.

Politicians love to cynically state that “the children are our future” – in this case it is true.

Even if the EU is able to glue itself together – which is in doubt, if you were France, the UK and Germany, would you allow your economy to be grounded by the PIGS? It may be too late even today – for many decades to come the term “lost generation” will become the explanation for the demise of the EU as an economic power.

The Bible says in Romans 6:23 that the wages of sin is death  – I say that the wages of economic stupidity seem to be the same. Hopefully the November elections will turn America away from Obama’s hope to change us into a European style welfare state. We have already seen that movie – we know how it ends.

10 thoughts on “European Union: RIP – The Lost Generation

  1. It was a threat – but the Greeks are so f’ed up, they don’t care.

    Not so much in the UK because they didn’t merge currencies, we still use £’s but Germany and France are petrified about Greece – they really could not give a rat’s ass about Greece specifically but they are afraid that the Greeks are the first domino to fall that will start the whole thing falling over. Greece, Romania and the Netherlands don’t even have governments right now because they either quit or the voters didn’t support them.

    There is so much animosity in the Mediterranean countries against the Visigoths to the north that it is ripe for a full on Franz Ferdinand moment.

    • SO how does this help us? The Fed has been giving the EU $’s for Euros and holding them (it used to be they would only do this for 24hrs, but they recently changed that to 6 months). If the Euro crashes, we will loose a LOT of money. So I do not see how the U.S. becomes anymore attractive than Europe – especially in consideration that Obama is pushing Cloward and Piven like it is about to melt down if he waits any longer. Why wouldn’t whatever liquid capital that’s left in the world seek out the last vestiges of true free markets left?

      (Yes, I am reacting to other posts you have put up, this just seems like a good place to address them all at once)

      • Well, I don’t know that the collapse of the EU does help us directly unless we go “With sane, rational and stable economic policies – tax, investment, energy – policies that support the free market instead of being socialistic and confiscatory, America can attract that global capital investment to our shores.”

        • That’s my point, Boss. What evidence do we have that sanity is suddenly going to come back in vogue? Don’t get me wrong: I understand full well that we could not only come roaring back, if we had sanity again, we could lay waste to everyone – even China (economically, that is). I just don’t see the signs that this nation is ready to head in that direction.

          I suppose we’ll have to see what happens in Wisconsin. That ‘might’ represent a ray of hope, but the vote counting isn’t over there yet, and that is a region of the country where votes show up in trunks and get counted.

  2. Reblogged this on Two Heads are Better Than One and commented:
    ***Courtesy of the blogger ‘UTAH’ @ the RIO NORTE LINE blog*** …This sums up the problems facing Europe and the EU quite nicely, and should serve as a warning to the U.S.A… Our prayers and energy need to be directed towards preventing such a disaster in the States, ’cause much of Europe is already toast. Many thanks to UTAH and the rest of the gang at “Rio Norte”. Make sure you read it all. —-(FYI: Just in case you didn’t know, the acronym “PIGS” in the article stands for Portugal, Italy, Greece and Spain)—-

      • Well, PIGS & PIIGS seem to be used somewhat interchangeably, so I assumed you meant to exclude Ireland, since I know they have been paying down their debt a little. If you want to add the 2nd “I”, I’ll happily edit my post to match.

        And I like your site, as well. A nice selection of topics, and you seem to be having a laugh, too. Glad I started following.

        I’m just a newbie, but I’m tryin’……
        😉

  3. Pingback: Two Heads are Better Than One

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