Monday, November 28, 2011

Chickens Roost For Europe's PIGS

I like to believe I've had a full and productive work life, thus far. Excluding paper routes, I took my first real job in the summer of grade nine. While in high school and college, I always worked weekends, and/or evenings, and summers.  Since then, I've worked continually for 20+ years.

I'm not expecting anyone's praise for this, as it's a fairly standard work ethic among my peers and I.  Imagine my bemusement then when I started my career to learn that many on the other side of the pond seeking a similar socioeconomic status do not share this ethic.   How could workers doing less, having shorter work weeks, enjoying midday "naps", taking longer vacations expect the same outcome (if not more) than the average North American Joe and Jane?

The answer, of course, is they cannot.  Well, more correctly, they could expect it, but it's folly to think they'll achieve it over the long term.  There's no free lunch.  Lay in the bed you've made.  Reap what you sow. Insert your favorite idiom or adage here, for in Europe, entire economies have been founded upon the fallacy that wealth and prosperity can be multiplied by dividing it.

The countries that stand to lose the most from decades of unreasonably generous worker rights and welfare-state-like giant social safety nets are the so called PIIGS; namely Portugal, Italy, Ireland, Greece, and Spain and if the acronym is offensive, might I suggest GIPSI?

Telling the average European over the last generation that we, on this side of the Atlantic, have worked forty-hour weeks with a meager two-week annual vacation would be akin to telling him that you thought the Earth was flat; that is, you'd be looked at as if you were crazy. Debt burden with yawning fiscal deficits, the economies of the PIIGS (and the club is by no means exclusively to these 5 countries) are broken with no painless fixes in sight.

It may have taken the US sub-prime mortgage fiasco to foster Europe's unraveling, but the clock had been ticking for a generation or more and the chickens would have come home to roost eventually.  A continent cannot take the month of August off on vacation and expect to keep up with the rest of the planet in terms of productivity.  High costs, weak competitiveness, and a distorted labor market all led to Europe's undoing.  Sure, beleaguered politicians and those who bow to them shuffling decimal points and zeroes around on paper may have kept all the balls in the air, but those days are now over.

I, like you, have heard all of the pundits' solutions trumpeted to fix Europe: austerity measures, defaults, dissolving the Eurozone, Chinese intervention. None of the remedies will be palatable for Europeans and whichever reforms are implemented will need to be comprehensive, pervasive, protracted, and reach deep into the pockets of all those affected. But it's time for Europeans to swallow whatever bitter pills will cure them. Now is not the time for arrogant pride.  Hubris sank the titanic, not an iceberg.