Wednesday, April 3, 2013

Europe's a Mess and Its Unemployment Rate is 12% ... Why Can't We See What Big Government and a Lack of Competitiveness Bring?

Big government and European economies go together. So do America's 'progressive' policies and a weak economy.

Thus, it's reasonable to assume that emulating Europe will tend to make our own economic situation more closely resemble Europe's over time -- big government combined with high unemployment and weak economic growth.

Yet our government knows best gang continues to take us straight down that path. And they're doing it for short term political gains and not for the general economic health and well being of all Americans. Either that or they really are economic illiterates, which appears to be a distinct and growing possibility.

In any event, let's take a peak at what is happening in the world of Europe's social-democratic big government. Maybe knowing more about what's going on over there will help shock us out of our own complacency about the prospects for solid long term U.S. growth and high employment levels. I hope so.

Vital Signs Chart: European Unemployment at 12% shows the sickening picture:

"The euro zone is still grappling with a lack of jobs. The unemployment rate for the currency bloc’s 17 nations was a seasonally adjusted 12% in February, up from 10.9% in February 2012. Among member nations with the lowest unemployment rates are Austria, at 4.8%, and Germany, at 5.4%. Among members with the highest unemployment rates is Spain, at 26.3%.
And New Signs Point to Deeper Europe Malaise says this about the situation:

"Rising unemployment and falling manufacturing activity in the euro zone indicate a slide into a deepening recession, intensifying the challenge for euro members and the European Central Bank to find a remedy against the slump.

Unemployment in the 17-country euro zone rose 33,000 in February to more than 19 million, said the European Union's statistics office Eurostat, keeping the jobless rate at 12%, the highest level since the euro's creation. . . .

Tuesday's data releases add to evidence that the euro-zone economy contracted again in the first quarter, for the sixth quarter in a row. Only Germany and a few small euro members are thought to have grown in the first quarter.

The recession is particularly acute in Southern Europe. Unemployment in Spain and Greece is over 25%. Shrinking economies in Greece, Spain, Italy and Portugal are making it harder to stabilize high public debts.

The euro zone's economy overall isn't yet shrinking at a rapid pace, like in the recession of 2008-09, when the bloc lost more than 5% of its gross domestic product. Rather, the euro zone appears caught in a slow, grinding contraction, with few signs of stabilization apart from in Germany. . . . "the euro-zone manufacturing sector looks likely to have acted as a drag on the economy in the first quarter, with an acceleration in the rate of decline in March raising the risk that the downturn may also intensify in the second quarter," said Chris Williamson, Markit's chief economist. . . .


Summing Up

The more than a decade ago creation of the Euro currency coupled with an ever growing dependency on government have resulted in weak economies, high unemployment and the growing irrelevance of European countries in the global economy.

Thomas Jefferson certainly had it right when he said that the best government is the one which governs least.

So did President Reagan have it right which he said that government wasn't the solution but instead that it represented the problem.

And so did President Clinton at least have the "right idea" when he declared that the era of big government was over. Unfortunately, what he said never happened.

Instead the popular 'progressive' movement has taken over U.S. government for now, and we may be destined to relearn the lessons of economic history, personal freedoms and the impact of big government.

Let's hope that we don't create that future for ourselves, because all we have to do is look at what's happening in Europe today.

My vote is that we choose to learn the lessons being offered by Europe 'vicariously' instead of  by direct experience.

So even though it may be too late for the Europeans to get their act together anytime soon, there's still time enough for us.

But it's definitely time to get going in the right direction.

At least that's my take.

Thanks. Bob.

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