The article by Mehdi Hasan discusses the announcement of rising unemployment rates to a record high of 10.7% recorded in the January economic figures (Graph 1). This announcement is amid at ongoing financial crisis in the euro zone. However, the biggest problem of the author is the way he explains the actions by Europe’s political and financial leaders with little regard to unemployment, while placing too much emphasis on inflation and output growth through what he terms their overly obsession with “austerity junkies” (Hasan, 6).
The writer is of the opinion that job creation is more important for the euro zone populace than solving the problems of inflation and GDP growth. To augment and solidify this opinion, the author further presents three observations related to the actions of Europe’s elites in their attempts to quell the current debt crisis.
Firstly, he points out the growing unemployment statistics across the 27-member EU. The most affected regions are Spain and Greece. In only these two economies, he notes, unemployment rates have risen above 20% in Spain holding the record of 23.3% and about 5.3 million people unemployed and Greece’s 20% unemployed (Graph 2).
The austerity measures in these two economies are EU imposed, and despite some countries such as Spain are fruitless when expressing requests for leniency on the imposed spending cuts, the EU leadership would hear none of that. In contrast to the approach taken by the EU leadership, the writer notes the US successful job creation path in 23 consecutive months through a fiscal stimulus supported by the American Recovery and Reinvestment Act after the country suffered one of the worst recessions in decades.
Secondly, he based his argument on ideas advanced by John Meynard Keynes, the father of modern economics. According to Keynes “look after unemployment and the budget will look after itself” (Hasan, 7). In regard to this popular remark, the writer observes the irony in EU leadership actions which seem to have completely neglected unemployment yet as the writer poses, “unemployment is the biggest barrier to deficit reduction” (Hasan, 7)
Thirdly, the writer takes the delicate subject of social welfare to justify his deduction. He laments that employment “is about human dignity and self worth”. He says that the unemployment crisis in the euro zone cannot be solved but that the leaders are reluctant to do what is necessary by labeling it unavoidable.
The writer provides valid arguments with indispensable facts, but he fails to convince why he thinks the EU leadership has taken the wrong direction to solve the EU debt crisis. First, the writer fails to solidly define the problem, as he does not provide any background check as to the real cause of unemployment.
His deduction is based on a completely wrong footing and this partly explains his biased approach to the issue. By biased approach here I mean, the writer does not in any way critically explain to the leader why the approach taken by the EU leadership has failed or why he thinks will never solve the EU problems.
Secondly, his approach is more of a short term measure rather than a long term measure. He fails to understand that the current unemployment problem is more a result of non-fundamental factors rather than one based on temporal variability on unemployment and inflation (Sloman, 67).
This means that in addition to advancing bail outs (which the EU leadership has advanced to ailing economies), it must not be left out that there are more pressing no-fundamental factors such as the fear that some economies might completely sink into bankruptcy which widen the already bad situation instead of addressing it.
In conclusion, in addition to critique provided, the writer should not forget that the current problem of the euro zone is a multi-nation problem rather than a one nation problem. It is therefore incorrect to compare the euro debt crisis with the US recession.
This is because, unlike in the US scenario, some member nations that are yet to sink into debt would be very reluctant to pump more money into ailing economies (as is the case now with Germany) for fear that they will also be dragging themselves deeper into the crisis. The fact that the problem affects more than one nation and by varied magnitudes means that in addition to an economic solution, a political deal is also necessary for a more acceptable solution across the board.
Hasan, Mehdi. “Unemployment matters more than GDP or inflation.” The Guardian. 04 Mar 2012. Web. 05 Apr. 2012.
Sloman, John.. Economics 7th ed, New York: Pearson Education, 2009. Print.
Source: “Euro Area Unemployment Rate”. Tradingeconomics.com Eurostat. Web. 5 Apr. 2012.< http://www.tradingeconomics.com/euro-area/unemployment-rate>.
Source: The Online Magazine of the American Enterprise Institute. Web. 5 Apr. 2012.