Bullying kills the job market
A few weeks ago, I went clubbing with some friends. As the lights came up and we were waiting for our coats, a bouncer started pushing us out the door. We tried explaining that it was raining and we were waiting for our coats but the bully would not hear a word. He kept pushing and almost crushed one of my girl friends on the wall as she shouted: “Brush your teeth, you stink!”
The same thing is happening today in Europe. Bullies are pushing frail economies against the wall and hoping they get on their feet before hitting the floor. For now, they are still barely standing, but I fear that once they tumble, they’ll rise and hit back without thinking about the consequences.
When the European Union was formed it was for very specific reasons. First and foremost, two important wars had started in Europe in the 21th century and it was imperative to establish durable peace between the countries. Furthermore, a European Union with few barriers and a common currency would increase trade and competitiveness.
However 20 years after its formation, it seems the opposite is happening. In fact, Q1 2013 saw an all time high unemployment of 12% in the Euro Zone. With such high unemployment numbers, Xenophobia is certainly on the rise too. Parts of Spain and Italy are demanding their independence; nationalism is burgeoning and a new era of austerity has emerged with the demands laid on Cyprus to tax its savings account.
Unfortunately, austerity doesn’t come without severe consequences. Frictional unemployment (unemployment that is good for an economy) will shift upward. Reduced budget for infrastructure and R&D will stagnate progress. Austerity reduces competitiveness and this has disastrous effect on the long term. All this will lead to standards of living heading the wrong way and unemployment unable to reach its normal levels before its too late.
I wonder, what would’ve happened had the bouncer helped us get our coats instead of dismissing us? Wouldn’t he have made new friends instead of running the chance of losing his job?