Do EU Wonks Really Have Endless Time to Get It Right?
By Staff News & Analysis - March 18, 2013

Analysis: Europe's social shock-absorbers show crisis strain … With more than 26 million unemployed in the 27-nation European Union, including nearly 6 million young people, the system is struggling, and in some places failing, to cope. Many of the jobless have exhausted their benefit entitlements. "In many countries, the poor are getting poorer," says Laszlo Andor, the EU's Commissioner for Employment and Social Affairs, pointing to a growing North-South divergence. "Europe's social fabric is clearly under pressure and a stronger response at EU and national level is needed." – Reuters

Dominant Social Theme: It is hard now but maybe it will get easier.

Free-Market Analysis: The idea behind this wire article is that while Europe is suffering, it will "bounce back." Unfortunately, it is more complicated than that and it starts with this word "Europe."

There is no Europe – or not as a physical entity. There are regions on a map and laws. But people are not born European. They are born as people, raised as people and partake of an individual CULTURE. This culture is generated by family, friends and community.

It is true that countries can provide a rallying cry and that people's vision of what a country is can coalesce into a larger sense of purpose. But that is a decision made by people and is not generated by boundaries on a map.

When it comes to Europe – as we have discussed in another article in this issue – people put trust in the promises of other people … in this case, Brussels's Eurocrats and their own politicians. And they have been badly let down.

We are, of course, used to thinking of regions and nations as identifiers but when people find a system does not work they are far more apt to identify with their family and local culture than they are with the larger, amorphous nation-state.

Nation-states have to be reasonably successful to work out. Otherwise people stop believing in them. It happened, for instance, in ancient Rome, a glorious nation-state that abused the trust of its people so badly that finally its citizens refused to fight for the boundaries that established their 1000-year-old country.

Those who believe that a "nation" – or a union – has unlimited chances to "get it right" may soon find out how wrong they are. This wire article seems to assume just that, and in a sense, it is a kind of dominant social theme – trust us and we'll figure it out sooner or later …

Here's more from the article:

Social spending rose across the continent in the first phase of the crisis but states like Greece, Portugal, Ireland, Spain and Italy that were hardest hit have now had to cut outlays on pensions, healthcare, education and unemployment benefits …

Political leaders are fretting about the affordability of the European social model in an era of high public debt, low growth and ageing populations.

"If Europe today accounts for just over 7 per cent of the world's population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it's obvious that it will have to work very hard to maintain its prosperity and way of life," German Chancellor Angela Merkel said in an interview with the Financial Times last December.

Social spending as a proportion of output is now at least 6 percent higher than in 2007 on average in the 34 countries of the Organisation for Economic Cooperation and Development, a club of industrialized democracies of which 21 are EU members.

Moreover, ageing populations are set to drive up the costs of pensions and healthcare in coming years, the OECD said.

The majority of EU governments have used the crisis as a reason to raise the retirement age, bringing it more into line with increasing life expectancy, said Willem Adema, an OECD expert on employment, labor and social affairs.

We can see from this excerpt just how difficult the European situation is right now. And we can also see how those running Europe got it wrong. The social safety nets that Europeans were confident about are fraying badly.

Of course, the article we are analyzing has a solution, as well. It tells us that political parties are now forming to protect the rights and pensions of the aging. In the Netherlands, two seats were won in parliament by just such a party.

But is this REALLY a solution? Again, people are the product of other human beings. They are not lines on a map. Those policymakers and journalists who believe that the EU in particular has an infinite number of chances to reconfigure the sociopolitical and economic system in a more tolerable way may be overestimating the tolerance of those who live and work – or can't find jobs – in the EU.

After a point the "tribes" – as we call them – of Europe will conclude that the system is truly dysfunctional and the familial and communal culture they've grown up with will take precedence over Brussels' … the seat of an empire far, far away.

After Thoughts

The best this article has to offer is the suggestion that aging citizens become politically active so as to salvage their benefits and pensions. But the more substantive questions are who will pay and will anyone pay attention by the time the current Great Unraveling is concluded?

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