As reported in the above-linked Reuters article, unemployment in the Euro zone hit a new record in April – 12.2%. And that rate only begins to tell the story:
Almost two-thirds of young Greeks are unable to find work … in Italy, the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work
This should come as no surprise to anyone who understands the relationship between a high population density (the euro zone is nearly as densely populated as China) and low per capita consumption. And per capita consumption and unemployment are inextricably linked.
The reasons for Europe’s unemployment crisis are clear:
- As anyone who has ever visited Europe knows, out of necessity, the vast majority of its people live in small apartments and consume very little, yet they are as productive as workers in the U.S. High productivity and low consumption spell trouble for employment, and makes Europe utterly dependent on manufacturing for export to gainfully employ its vast labor force.
- Following its ascension to the World Trade Organization over a decade ago, China has steadily “muscled in” on Europe’s export business.
- For decades, Europe has relied heavily on deficit spending on social programs to prop up consumption and maintain an illusion of prosperity. Their debt level has reached an unsustainable level, and austerity programs have kicked government employees to the unemployment lines and falling incomes have bitten into Europe’s already-meager rate of personal consumption.
There is no escape from this trap that has been set by economists’ reliance on population growth to stoke macroeconomic growth. Beyond the euro zone, unemployment around the globe will worsen as the world’s population continues to grow. More and more nations turn to exports to bolster their economy while fewer and fewer net consumers remain. How long will it be before this crisis begins to rip at the fabric of civilization? It sounds like Europe may be approaching that point.