German Finance Minister Wolfgang Schaeuble is a frustrated man. With unemployment rates in Germany hovering at around 8 percent, and Greece and Spain at almost 60 percent, he believes the EU is on the brink of “revolution.” His answer is not to protest signscrap the welfare model however; he wants to preserve it.

While Germany insists on the importance of budget consolidation, Schaeuble spoke of the need to preserve Europe’s welfare model.

If U.S. welfare standards were introduced in Europe, “we would have revolution, not tomorrow, but on the very same day,” Schaeuble told a conference in Paris.

Not everyone agrees. Italian Labour minister Enrico Giovannini says European youth are being asked to put their lives on hold, and that this is “unacceptable.” Werner Hoyer, head the European Investment Bank, acknowledged that there is no plan at this point to direct the spiraling downturn of the EU economy. There is, instead, a country-by-country “patchwork” approach. For instance, Greece is attempting to focus on job training and entrepreneurship for 350,000 young people, and France is working on a similar plan within its own borders.

In Becoming Europe, Samuel Gregg (Acton’s Director of Research) addresses this issue. In early 2011, young people began protesting across Europe due to their economic plight.

One of the most common complaints of the “indignant ones” (as they called themselves) was their inability, after several years of higher education to obtain anything other than part-time contracts.

These los indignados were frustrated by having to live with parents for longer and longer times, and having virtually nowhere to use their educations. But as Gregg points out, these young people aren’t seeing the true economic picture:

It is sad to report…that los indignados were not protesting against overregulation and other labor-market rigidities demanded by unions and conceded by governments. By and large, the indignant ones wanted exactly what unions had helped secure for their parents and grandparents: jobs for life, free health care, state-guaranteed minimal incomes, six weeks of paid annual vacation, early retirement, and generous state pensions. In other words, they wanted Social Europe. Far from being revolutionary, they were firm status quonarians.

The EU economy is being squeezed to death by enormous taxation, top-heavy entitlement programs nations can no longer afford, and the lack of promotion of free enterprise.  People are simply not incentivized to flourish economically. This isn’t a revolution. This isn’t even stagnation. Dario Fo, the Italian playwright, may have gotten right:

Do people demand a really just system? Well, we’ll arrange it so that they’ll be satisfied with one that’s a little less unjust … They want a revolution, and we’ll give them reforms — lots of reforms; we’ll drown them in reforms. Or rather, we’ll drown them in promises of reforms, because we’ll never give them real ones either!!

  • Curt Day

    Some people have a different analysis of the European economy. Rather than being squeezed by entitlement programs, isn’t it possible that the economy there and here is being squeezed by the consolidation of wealth into the hands of a few?

    • http://www.acton.org/ John Couretas

      And stagnant or long term GDP declines have nothing whatsoever to do with this, right? OTOH, sustained, significant economic growth has no effect at all on poverty because the “rich” get it all. Correct?

      • Curt Day

        Doesn’t that depend on the cause of the decline? And, what do we discover when we compare incomes for the different classes?

    • RogerMcKinney

      That’s the typical socialist line, and that is not intended as an insult. It’s just a fact. Socialists blame inequality for recessions. But socialism isn’t science; it’s an ideology.The science of economics has clear and tested theories of the causes of recessions and none include inequality.

      It doesn’t matter what “facts” they drag out. Facts have to be interpreted. You can interpret them by science or by ideology.

      • Curt Day

        Actually it’s observation. And just merely waving your hands and calling it a “typical socialist line” is to avoid issue. I’ve people like you who claim that science is on the side of capitalism. But these are the same people who are afraid to recognize that economics is a social science, not a pure or even physical science. And, not all economists agree with you. Of course, the last time I wrote that, you replied quite tritely that those who are correct do. When will you deal with details?

        • RogerMcKinney

          Anyone who has raised children knows that it’s easy for them to ask questions that take a great deal of effort to explain and knowledge that they don’t have in order for them to understand the answer. In a similar way, it’s easy to ask questions like “isn’t it possible that the economy there and here is being squeezed by the consolidation of wealth into the hands of a few?” which cannot be answered in a blog post. The simple answer is that the science of economics has proven that is not possible. But for you to understand the answer, you have to know at least econ 101. Socialists have asserted that inequality causes financial crises for over 150 years and economists have provided the evidence that argument is wrong for the same period, but socialists never stop asserting it because there is always someone gullible and ignorant enough to latch on to it.

          I cannot provide you with all of that evidence in a blog post, and to insist that I do is unreasonable. But here is a very small piece of the evidence: the greatest reduction in inequality in the history of mankind happened between 1800 and 1900 when the US and UK had the greatest economic freedom. Why didn’t the greater inequality in 1800 prevent such progress?

          Yes, economics is a social science and not a natural science. I have never read any economist who was “afraid” to admit the obvious. However, all that means is that the natural sciences are simplistic compared to the complexity of economics. And yes, economists who ignore the science and emphasize socialist ideology will disagree with mainstream economics, but you have to ask is there good science behind their rejection of the mainstream, or ideology? My reading of them indicates it’s all ideology because they refuse to address the criticisms that mainstream brings against them and asset things that mainstream has proven false for a century.

          • Curt Day

            roger,

            You always deflect and assume a superior position of authority. This is counter to the scientific mind because science is an inductive venture. That is it is built upon individual experiments and case studies. So if you were an economist who relied on science, you would be able to rattle off study after study supporting your claims–though you would need quite a few studies. But you didn’t. And what you did cite was not even close to science but rather a conclusion based on the reasoning of what else it could be and that was based on an unproven assertion.

            Inequality reigned all throughout the 1800s and Blacks were not the only victims though there were victims throughout the whole century.

            Finally, another mere assertion is that economists, assumedly those who disagree with you, ignore the science and go with ideology. But you have not shown any scientific findings that support your case. All you have shown yourself to be is a worshipper of Capitalism. It is your religion.

          • RogerMcKinney

            What’s truly counter to the scientific mind is to reject economics as you do. BTW, you don’t “rattle of study after study” so why do you expect me to? I’m not in the habit of wasting my time with someone who denies the fundamental principles of economics.

            The fact that you think economics works like the natural sciences shows your ignorance of epistemology and the ways in which the social sciences differ from the natural sciences and so require different methodology. I simply cannot teach you all you need to know about epistemology and economics through blog posts.

            Yes, the simple explanation I gave you was based on reason. You’re asking me to write an economics text book for you on a blog. If you really care about the truth, you would learn some basic economics. I started out as a socialist as a young person, like most young people do. But I have spent the past 30 years analyzing both sides of the debate. You clearly have uncritically accepted the socialist side.

            And you dodge my question. Yes, blacks were victims, but that is beside the point. If inequality causes crises, how did the US and UK get through the 19th century with higher standards of living for all, including blacks, with much higher levels of inequality? And how was it possible to reduce inequality with much free markets than we have had in the 20th century?

          • RogerMcKinney

            PS, Isn’t what I wrote kind of obvious? Do you really need a statistical analyis of the spending and saving habits of the wealthy? Do you need large amounts of data to know that the sun is warm? Yes, the most certain principles of economics are based on reasoning from the obvious. Do you really think that most wealthy people hold their wealth in physical gold?

            Of course, one of the main attacks on economics by socialists in the 19th century, especially from Marx, was an attack on reason. Marx convinced most people that reason is nothing but a tool for promoting class structure. Of course socialists had to use reason as well, so to get around the contradiction they asserted that only they could reason because they had freed themselves from class consciousness.

        • RogerMcKinney

          PS, the main reason inequality can’t cause a crisis is because the wealthy don’t keep their wealth stored in gold in a warehouse where it does not good. The wealthy either spend their wealth, which creates jobs, or they invest it in businesses through stocks and bonds, which creates jobs. If they invest in US government debt, that money gets spent by the government. Inequality can cause crises only if the wealthy take their money out of circulation in the economy, which means buying physical gold, but even that doesn’t take it out of circulation completely because the gold seller has exchanged gold for cash to spend and create demand for other products.

  • RogerMcKinney

    You’re building a straw man economics. Yes, in macro theory different schools concerning business cycles exist, but the differences on other matters are small and there is enormous consensus about most things. But consensus is not science. Evidence and reason are science. Appealing to economics is not an appeal to an authority, such as the Pope. It’s an appeal to evidence and reason.

    Yes, I make assertions that I cannot prove in a blog post because of limited space. I also don’t want to waste time with someone who isn’t interest in the truth. But that doesn’t mean the assertions I make haven’t been proven hundreds of times before by economists over the past century. If you would bother to learn economics you would see that. You start presenting links to studies that back up your assertions and I’ll provide some for mine.

    • Curt Day

      Roger,
      when you make the comments you do about both neoliberalism and economists who disagree with you, you show that you do not have the expertise you want portray in your notes. And that is the problem. You want to write authoritatively so as to brush aside other perspectives and even criticisms. And along with your failure to cite any research, you show your disdain for the scientific method.

      In other words, it is you who hasn’t learned the economics you are proclaiming. It is no problem for me to say that there is a lot in economics I have not read. But that doesn’t mean that I can’t make meaningful observations since friends who are business owners or peers who teach economics have no problem recognizing the validity of many of my comments.

      So be that pope of economics here. The sheep will listen to you.