If you’re a young American adult (the 25-to-34 age range), and you have a good job, count yourself blessed. Most of your peers aren’t so lucky. The New York Times reports that “[o]ver the last 12 years, the United States has gone from having the highest share of employed 25- to 34-year-olds among large, wealthy economies to having among the lowest.”
Of course, young Europeans have been dealing with this for years. Greece, Spain and Portugal have unemployment rates between 17-27% (Greece being the highest), and the outlook is grim for most of the European Union (EU). Even taking into account that many young people may be studying or raising families and therefore not looking for full-time work, the deterioration of the EU’s economies is obvious. But it’s not just lack of jobs. As Samuel Gregg, Acton’s Director of Research, points out in his book Becoming Europe, “Europe’s social systems are under considerable internal strain from the remorseless deterioration associated with unaffordable welfare states, population decline, low productivity levels, and the preferential treatment of politically connected insiders.”
Are things better here in the US? Not according to David Leonhardt.
American companies are doing more with less.
“This still is a very big puzzle,” said Lawrence F. Katz, a Harvard professor who was chief economist at the Labor Department during the Clinton administration. He called the severe downturn in jobs “the million-dollar question” for the economy.
Employers are particularly reluctant to add new workers — and have been for much of the last 12 years. Layoffs have been subdued, with the exception of the worst months of the financial crisis, but so has the creation of jobs, and no one depends on new jobs as much as younger workers do. For them, the Great Recession grinds on.
However, Leonhardt notes that even with all the data available, unemployment among this group is so widespread, it’s impossible to pin on one or two factors. But Gregg believes there are some indicators from a economically dysfunctional Europe that can teach Americans a thing or two. He quotes Vaclav Klaus, Czech president, in a 2011 lecture:
It seems that Europeans are not interested in capitalism and free markets and do not understand that their current behavior undermines the very institutions that made their past success possible. They are eager to defend their non-economic freedoms – the easiness looseness, laxity and permissiveness of modern or post-modern society – but when it comes to their economic freedoms, they are quite indifferent.
One of the premises of Gregg’s book is that Europe is where it is economically because of heavy reliance on the government from cradle to grave by citizens of the EU. Entitlements are simply a cultural expectation – and they are killing the EU’s economies. Gregg states, “Revitalizing market economic culture in America is thus not a question of abolishing the state, but rather a matter of limiting its role.”
Leonhardt has other ideas:
What might help? Easing the parts of the regulatory thicket without societal benefits. Providing public financing for the sorts of early-stage scientific research and physical infrastructure that the private sector often finds unprofitable. Long term, nothing is likely to matter more than improving educational attainment, from preschool through college (which may have started already).
For American to avoid becoming Europe, Gregg says we must rely on free markets rather than redistribution of wealth, economic liberty, rule of law, entrepreneurship and the ability to take risks economically – all things that have made America great in the past.
Leonhardt ends his piece noting that young Americans, despite high unemployment, have great hope for their future. They should: America is a strong and able country, and if we can avoid becoming Europe economically, their hopes will be realized.