Tuesday, 14 May 2013

EUtopia Lost? Thoughts on Austerity

I am truly worried about Europe. I am currently marking essays on the effects of austerity on the eurozone. Perhaps two out of 250 students wrote that deeper integration of the EU would be a way out of the crisis. As a Europeanist, I had always placed my hopes in my generation: a generation of travellers and exchange students, a generation that loves to learn new languages, a generation that experiences the achievements of European integration every day when they use the euro. I read today that particularly the youth of the European south is losing confidence in the European institutions. In France the majority believes that European integration has harmed the French economy. Austerity is devouring the backbone of this Union.

Europe's youth is becoming disillusioned
One would think that the idea of austerity as a means to resolve economic crises had been abandoned ages ago. John Maynard Keynes understood in the 1930s that times of crisis require programmes to boost the economy, and that do not suffocate it. Nevertheless, Europe has chosen the path of austerity. When Germany’s unemployment surpassed reached nearly 5 million in 2005 (11,4%), the Schröder-government introduced austerity measures to fight unemployment. Unemployment benefits were controversially cut quite radically, and the German welfare system received a serious blow. Nevertheless, the policy was afterwards justified by its success. Germany today has one of the lowest unemployment rates in the EU, and it is among the few countries that have survived the crisis relatively unscathed. Following the German example of the 2000s, countries lacking an industrial base embraced austerity, thereby fulfilled conditions that allowed them to receive bail-outs from the IMF and the eurozone. Germany is competing with China over the title of being the world’s largest exporter. Its entire economy is built around exports. A policy that keeps wages low has the same effect as the devaluation of one’s currency. However, such policies only make sense if the economy is based on exports. The economies of the European south are based on domestic consumptions – austerity is bound to fail. The current German dominance in Europe is encouraging the application of a model that is not applicable to economies like those of Spain or Greece.

At the same time, unemployment skyrockets. Europe is largely a post-industrial region with the lowest fertility rate in the word. Never has there been a generation that is proportionally as tiny as mine. While 35% of the population were below 20 in 1950, today merely 20% are below 20. I am part of a small generation, but youth unemployment is higher than ever. Austerity has caused youth unemployment in Spain to skyrocket from 17% in 2007 to over 50% in 2013. Greece, Portugal, Italy and Ireland have experienced similar developments. The blame for this is inevitably and rightly directed at European leaders. Instead of regulating a banking industry that has caused the crisis in the first place, it was decided in the European Council to implement austerity measures that have crippled half the continent. The European Council is an intergovernmental institution that it dominated by the strongest member states, and most Europeans have no say about who leads those member states. There is a time for any emotion, and if you understand what is going on here, you have every right to feel frustration, helplessness, and also anger, against the incompetence, coldness and supposed hyper-rationality of the politicians of our time.

Youth unemployment in the EU
In the the Bible says that a people without vision are doomed. I had always thought that the unification of Europe could provide this vision - I see it not only as a vision for Europeans, but for all of humanity, because it proves that people can work together, and that national divisions are insignificant. This EU has no chance to survive unless its institutions are fundamentally reformed, allowing for a European government that is democratically elected by all Europeans. Austerity is not the choice of Europeans – democracy in the EU is also in crisis. Austerity turning the tides against European integration, and if you believe that the crisis is over, think again.

Harald Köpping

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