February 21, 2011
A Critical Eye on Europe
The economical crisis started in the last quarter of 2008 spread to all around the world. While some of the countries have not recovered from the effects, some countries enjoyed the benefits. However, after 2.5 years, still suffering from the effects of the crisis should signal something. The hidden message under this situation is “Lots of things have changed for Europe”…As a matter of fact, three major changes occurred; namely, demography, transnational incompatibilities and competency.
Although economists usually focus on consumption, debt, growth, GDP etc., the primary concern should be the “demography” in an economy. (Demography: the branch of sociology that studies the characteristics of human populations) How many of Europeans have noticed the consequences realized around? Who compared her grandpa’s life expectancy and her daddy’s grandpa’s? Why unemployment rate is high this much? Is the only answer “global crisis”?
Let us turn our faces to the facts. Western European countries have been aging rapidly. Furthermore, there is no support from the young couples in order to make population younger. In other words, birth rate is low compared to old times. Let us have a look at the graph below:
Children per woman vs. Life Expectancy 1959-2009
It can be clearly seen that while in 1959 (beginning years of prosperity in Europe) the life expectancy was 70 years on the average and the children per woman was approximately 2.75. Comparatively, in 2009 life expectancy of residents boomed to 80 years but the children per woman dropped to 1.75. What do these numbers mean? Europe is aging and the aging will be felt more severely in the following years. Elderly populations consume more (health, insurance etc.), but produce less (long vacations, less working hours etc.). The downward trend of working hours with respect to life expectancy can be seen in the graph below.
Working hours per week vs. Life Expectancy 1992-2007
The essential interpretation according to this framework is Europe is inclined to consume more. Consuming more than production creates “burden” for the countries; in short “debt”.
Secondly, European Union was established as a pole for the world. The unity relations were established on strong economical and social base. Nevertheless, promiscuous expansion policies resulted in problems. Even though some countries had exhibited bright economical performances, in the accession period the sustainability of their emergent conditions was not questioned. Although the common trade market, common monetary policy goals are the endeavors that should be appreciated; these precipitant policies damaged countries that are not on the same scale in terms of development and maturity. Today as a result, while some European countries work as the locomotives of the united economy; some others are creating burdens and damaging the economical stability. Policymakers are in such a situation that any possible intervention affects some countries positively while wounding others. Zero level interest rates squeeze possible monetary policies in order to stimulate economy. Fiscal policies create substantial debt problems, when the unrecovered position of Europe is taken into account, debts should be controlled strictly. These predicaments make the situation more and more complicated. On the other hand, the countries not assuring “Maastricht Criteria” (five criteria set out in the Treaty of Maastricht that must be met by European countries if they wish to adopt the European Union’s single currency, the euro) in Euro Zone should be an evidence for the depth of economic problem.
Lastly, competency is an issue that should be taken into account. What do I mean by competency? Well. As mentioned above, life expectancy increases day by day. The pushed up retirement ages and limited job opportunities harm the “fresh idea generation” process. The absence of the youngsters in creative jobs undermines the competency of Europe. Moreover, there are lots of people maintaining their lives with unemployment payment around the Europe. More openly, the excessive prosperity does not push people to work and generate more. The decreasing number of “European” Ph.D. students in European universities is a concrete proof. On the other hand, the exaggerated education costs discourage people to sustain their studies. All of these problems reduce the motives of further education and correspondingly competency of Europe. The graph below shows the tertiary education (university) expenditure per student from 1999 to 2004. The data shows that although GDP per capita increased 3000$ per person on the average, there is no increase in university expenditures per person.
Expenditure for University Education vs. GDP
per Capita 1999 – 2004
Compared to emerging economies such as China, India etc. their education investments, doctoral education incentives make them competitive in the world market. The report, China’s Educational Performance: Implications for global competitiveness, social stability and long-term development, written by economist Cliff Waldman in 2008, states that China’s tertiary education enrollment ratio 6% in 1999 climbed to 20% in 2005. These countries not only gathered “manufacturing” processes of worldwide known brands within their borders, but also R&D centers, think tanks and design institutes. The old perception of “Emerging markets are the labors of the world” has changed.
What Can European Youth Do?
Actually, as I mentioned above, all these problems are structural. The current crisis may be alleviated by well prepared stimulus programs of governments. But it should not be forgotten that the vulnerability of Europe has increased. Consequently, the root causes of the structural deficiencies should be resolved. Some strategic steps have to be taken. The most important responsibility is on the shoulders of European youth for Europe’s future. Being aware of these problems as youngsters and shaping the prospective life is vital.
· Consumption behaviors should change and household savings should increase.
· Working habits of Europeans have to change. Youth should work more. Long vacations, less work hours should be eliminated.
· Education, innovation and knowledge creation should be supported among youngsters.
· Education infrastructure and incentives should be promoted by governments.
· New demographic recovery strategies should be determined and followed.
The suggestions above are political level decisions. However, as European youth our responsibility should be discussing the benefits and raising youth voice on these core issues. In order to implement these political and strategic decisions, youth awareness should be demonstrated to politicians. “WE SHOULD” emphasize our desires for education and pushing innovation frontier further. For a livable world, “WE SHOULD” underline the “environmental concerns”. Five centuries’ cumulative knowledge and values should be advanced by the hands of youngsters. In order not to face with such crisis again, “WE SHOULD” differentiate the “liberalized” and “unregulated” financial markets.
NOTE:All tables used above are obtained from www.GapMinder.org. GapMinder collects the various data from official data releases.Author : ipwg