The Voyage of the Doomed

The New York Times describes the plight of southern Europe's "doomed generation"; young people flush with the finest credentials who can't find a paying job. "Francesca Esposito has a law degree and a master’s and speaks five languages. She recently quit her unpaid job for Italy’s social security administration."  Esposito was working pro bono for old people, who she believed were squatting on the jobs that the young should have.

She not only worked for free on behalf of the nation’s elderly, who have generally crowded out the young for jobs, but her efforts there did not even apply to her own pension. ...

The outrage of the young has erupted, sometimes violently, on the streets of Greece and Italy in recent weeks, as students and more radical anarchists protest not only specific austerity measures in flattened economies but a rising reality in Southern Europe: People like Ms. Esposito feel increasingly shut out of their own futures. Experts warn of volatility in state finances and the broader society as the most highly educated generation in the history of the Mediterranean hits one of its worst job markets.

The phrase "no American is ever made better off by pulling a fellow American down, and every American is made better off whenever any one of us is made better off. A rising tide raises all boats," once derided as the hallmark of simplistic American trickle down economics, may embody some wisdom after all. At least in comparison to a low growth, redistributive economy which is running out of stuff to redistribute.

Even before the economic crisis hit, Southern Europe was not an easy place to forge a career. Low growth and a corrosive lack of meritocracy have long posed challenges to finding a job in Italy, Greece, Spain and Portugal. Today, with the added sting of austerity, more people are left fighting over fewer opportunities. It is a zero-sum game that inevitably pits younger workers struggling to enter the labor market against older ones already occupying precious slots.

Europeans are now seeking greener pastures, in places like Costa Rica. One lady, fed up with earning the princely sum of $791 a month as a children's drama teacher, is going to teach in Central America. "What we have is a Ponzi scheme,” said Lawrence Kotlikoff, an economist at Boston University and an expert in fiscal policy.

He said that pay-as-you-go social security and health care were a looming fiscal disaster in Southern Europe and beyond. “If these fertility rates continue through time, you won’t have Italians, Spanish, Greeks, Portuguese or Russians,” he said. “I imagine the Chinese will just move into Southern Europe.”

He might as well have been talking about American entitlements, like Social Security, whose chief shortcoming, in the view of some, is that it is not as extensive as those Europeans enjoy. Give it time and Hope and Change will upgrade it to European standards. Or maybe not. The welfare state is coming face to face with the problem of how to fund its generous entitlement system with shrinking numbers of highly credentialed service workers who can't find jobs.