Is the Arab Spring coming to Europe and to the US.
Revisiting Europe, we see Nouriel Roubini has apparently withdrawn his prediction of a Greek exit from the eurozone.
speaking from Berlin last week, Roubini said
“To keep Greece in the euro zone, effectively you need a transfer union, you have to realize that the problems of Greece are long-term, it’s going to take 10 to 20 years to do the austerity and the reform to stabilize Greece and therefore you have to give money and you have to be patient,”The New York Times characterizes it thusly:
"The words are an about-face for the bearish economist, who in July forecast that Greece would exit the euro by 2013.
The probability of a Grexit is still “meaningful,” but less than 50% these days, according to Mr. Roubini, who is known as “Dr. Doom” for predicting in 2006 the global economic crisis.
I'm not sure they are a complete about face. I seem to recall Roubini opining that Greece could be bribed to stay in the Eurozone, the domestic cost being a decade of depression. That seems to be what is happening.
Last spring's restructuring, where the private bondholders got bailed out by the public banks with the understanding there would be no more restructuring seems to be by the board. Oops, as soon as those conditions were set, they were abandoned.
It is very unlikely Greece will hold together politically or socially under a decade of depression. Some of the scenarios are scary.
Will the Arab spring become the European Spring become the American Spring? Last year we were met with the remarkable revolutions across North Africa: Tunisia, Lybia, Egypt, elsewhere. Millions of often well-educated young people without prospects taking to the streets adn taking it out on the repressive, corrupt, authoritarian governments, freeing themselves to an uncertain, but more democratic future.
Highly educated, unemployed young people. Now a mark of the European economy.
Another recent New York Times article highlighted France:
a growing problem in France and other low-growth countries of Europe — the young and educated unemployed, ... go from one internship to another, one short-term contract to another, but ... cannot find a permanent job that gets them on the path to the taxpaying, property-owning French ideal that seemed the norm for decades.
This is a “floating generation,” made worse by the euro crisis, and its plight is widely seen as a failure of the system: an elitist educational tradition that does not integrate graduates into the work force, a rigid labor market that is hard to enter, and a tax system that makes it expensive for companies to hire full-time employees and both difficult and expensive to lay them off.
The result, analysts and officials agree, is a new and growing sector of educated unemployed, whose lives are delayed and whose inability to find good jobs damages tax receipts, pension programs and the property market. There are no separate figures kept for them, but when added to the large number of unemployed young people who have little education or training, there is a growing sense that France and other countries in Western Europe risk losing a generation, further damaging prospects for sustainable economic growth.
“It’s a disaster for everyone,” said Jean Pisani-Ferry, who runs the economic research center Bruegel in Brussels. “They can’t get credit, and they’re treated awfully by employers. And then there are all those young people in jobs that don’t match their skills.” The labor market, he said, is “deeply dysfunctional.”
Throughout the European Union, unemployment among those aged 15 to 24 is soaring — 22 percent in France, 51 percent in Spain, 36 percent in Italy. But those are only percentages among those looking for work. There is another category: those who are “not in employment, education or training,” or NEETs, as the Organization for Economic Cooperation and Development calls them. And according to a study by the European Union’s research agency, Eurofound, there are as many as 14 million out-of-work and disengaged young Europeans, costing member states an estimated 153 billion euros, or about $200 billion, a year in welfare benefits and lost production — 1.2 percent of the bloc’s gross domestic product.
In Spain, in addition to the 51 percent of young people who are looking for work, 23.7 percent of those 15 to 29 have simply given up looking, said Anne Sonnet, a senior economist studying joblessness at the O.E.C.D. here. In France, it’s 16.7 percent — nearly two million young people who have given up; in Italy, 20.5 percent.
As dispiriting, especially for the floating generation, is that 42 percent of those young people who are working are in temporary employment, up from just over one-third a decade ago, the Eurofound study said. Some 30 percent, or 5.8 million young adults, were employed part time — an increase of nearly 9 percentage points since 2001.
That trend is especially evident in France, where 82 percent of people hired today are on temporary contracts, said Michel Sapin, the labor minister.
Ms. Forriez said: “Yes, it’s true, you can find internships or apprenticeships, no problem. The companies take you with open arms. But when you speak of employment, of a permanent contract, it seems they no longer need anyone.”
Ms. Sonnet, the O.E.C.D. economist, said that high youth unemployment is a regular problem in France. Companies are afraid to commit to permanent hiring when economic growth is stagnant and charges for social benefits are so high, and the educational system tends to value liberal arts over technical or industrial expertise.
They “often don’t learn the skills that employers need,” she said. “They’re simply not ready to work.” Ms. Sonnet promotes more use of apprenticeships, as in Germany, where students work part time while they go to school.
François Béharel, the president of Randstad France, a branch of the multinational employment agency, said that the problem of youth unemployment among the educated is worsening at a time when employers are crying out for engineers, computer technicians, electricians and welders.
“We have to begin with parents — ‘Stop dreaming of white collars!’ ” Mr. Béharel said. “Blue collars, there really is a true path for them,” he said. But small and medium-size companies, which are France’s primary employers, do not have the resources or the profit margins to train the untrained.
“We’ve piled up battalions of students in general education, and everyone knows that there aren’t 10,000 among them who are going to find the job that they imagined when they entered university,” he said. Only 40 percent of students entering university get their degree; the rest drop out, trained for nothing.
Still, he said, a college degree is the best path to a job — only 10 percent of those with diplomas are unemployed after four years, while 40 percent of those without diplomas are jobless. But the passage to finding that job is now longer, costly for the person and for the state. It also delays marriage, house ownership and retirement.
At the Real World Economic Review, John Schmitt observes about the commentary:
... the NYT argues, is “a failure of the system,” which has as its key features: “an elitist educational tradition that does not integrate graduates into the work force, a rigid labor market that is hard to enter, and a tax system that makes it expensive for companies to hire full-time employees and both difficult and expensive to lay them off.”
But, wouldn’t it be useful for NYT readers to know how the United States compares? The NEET numbers cited in the story are OECD calculations for 2010. For the same year, the same source puts the figure for the United States at 16.1 percent — not far from France (16.7 percent), which the piece paints as suffering through a “growing problem” common to “other low-growth countries of Europe.”
If NYT readers knew the U.S. NEET rate, they would be able to ask why the rates here are so close to those in France even though we don’t have a euro crisis, or apparently, “an elitist educational tradition,” or rigid European-style labor markets, or high European-style taxes, or strong European-style job protection laws.
And, wouldn’t it be useful to know if other European countries are faring any better? The same OECD data also show some EU countries are outperforming the United States. The NEET rate in Germany, for example, is only 12.0 percent; in Denmark, 10.5 percent; in the Netherlands, 7.2 percent. Compared with the United States, all three have highly regulated labor markets, high unionization rates, and high taxes. How have they managed to provide better opportunities for their young people than France and the United States?
Demand Side observes that the concept of NEET ignores also the realities of the Arab Spring. the problem is not education, the problem is jobs, incomes and demand. to say, as the article does that ample jobs await the appropriately trained ignores a couple of items: the traiing is a cost and a risk to the potential employee that could easily be borne by the employer if the economics were right. In other words, companies needing welders, electricians, engineers and crying for the absence of them could certainly train likely candidates for those positions on their own dime. They want the skills, after all, but they want the employee or the state to pay for them.
Those skills are often in technical and engineering fields of automation, we note, and jobs are being automated or outsourced as a matter of corporate competition, reducing incomes to all, reducing demand in the private sector, and so reducing the margins needed to pay for the education and training they demand, and increasing the corprate whining for others to pay for the education and training they want. It is an internal dynamic of the capitalist markets, nto a failure of workers or government, that creates the labor economics the capitalist markets are complaining about.
Here in the U.S., the graduates of Wharton and other expensive high profile business schools are likley looking with a jaundiced eye on similar claims by American companies, that they have jobs, but no qualified applicants. It wasn't a decade ago that Wall Street was demanding with six-figure starting salaries that physics and engineering students turn to finance. We see how well that worked out. For the economy and for the students themselves, now out of work in that field, but carrying enormous debt.
Two decades ago it was the computer science degree. Big influx of people into that arena, now manning the help desk somewhere, trying to carry their student debt forward. What happened to the six figure starting salaries? Now they're going to new graduates with more timely traiing.
And we see that well-meaning and motivated young people, and some who just cannot find work, are being fleeced by for-profit technical colleges. Ruin ed lives because we as a nation could not provide a fair start. And this a legacy of the nation which produced the GI bill and grew on cheap higher education as an opportunity for all. We ought to be ashamed.
Meanwhile the intelligent and forward-looking have gotten educations in environmental sciences, seeing that we are cooking the planet and the rational answer will lead to demand for these sorts of educations, not to mention they are the challenges that inspire the young.
Ooops. What we need, says the capitalist market economy, are engineers and welders to extract cheap energy and increase the heat on the collapsing environment. We're not cooking the planet fast enough.
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