Why Germany’s Medicine Is Killing Europe
What if austerity is not the proper receipt? What if Germany, writing the bail out tickets has misdiagnosed the European disease? The Atlantic on the European unemployment and austerity of Southern Europe.
Europe has many problems. But one problem it doesn’t have is too little unemployment. That’s apparently news to the continent’s lords of finance — at least based on the policies they are prescribing for Europe’s troubled economies. They’re acting as though the gravest possible crisis the euro zone could face is inflation. That, in a nutshell, is why this crisis never went away and will only get worse for Europe’s unemployed.
The below chart compares (1) unemployment and (2) proposed cuts as a percentage of GDP across the EU. (Figures courtesy of Eurostat and The Economist). Countries with the worst unemployment generally have to make the biggest fiscal adjustments over the next year. This is a particularly perverse case of what economists call pro-cyclical policy — that is, policies that reinforce the trend in the economy.
Full article here.