Lesson for Obama: Greece’s Bailout Socialism Penalizes Youth Most – Investors.com

Socialism: Rational or not, Greece’s street riots and emigration rates signify one thing: Socialism offers very little to the young. So why is the EU’s $172 billion bailout geared toward saving so much of the failed socialist system?
As Europe prepares to deliver a historic $172 billion bailout to Greece in a deal announced Monday, it’s pretty much a given that the austerity conditions required, in the absence of a true free market, will hit youth hardest. Athens will be trashed by another youth rampage, as many youths blame the pain on something other than Greece’s deeply rooted socialism.


A bigger effect will come from Greeks who do recognize reality. They won’t riot. They’ll leave, voting with their feet just as Eastern Europe’s youth once did.
The young in both cases are victims of socialism, which claims to make people equal but, in reality, penalizes the young. For Greece, a country already gutted by a below-replacement birth rate and an aging population, that’s a disaster.
It’s not just Greece, but also every EU state with institutionalized socialism — where high government spending seeks to create a warm blanket insulating everyone from risk, but instead has led to bankruptcy.
Data on Europe’s exodus are scarce, but enough credible reports recognize that human capital is flowing from indebted socialist states to vibrant free-market states. Chile, Canada, Australia and Hong Kong are seeing inflow. That’s directly tied to the fact that free-market states are the most youth-friendly.
One out of five jobs in Greece is held by a bureaucrat, which is why unemployment among the under-24s runs at 42%. A 2010 poll shows that seven out of 10 Greek college graduates seek to leave.
Some 9% of Greek college graduates and at least 51% of Greece’s Ph.D.s are already gone, according to University of Macedonia demographer Lois Lambrianidis.
What jobs there are come from the bottom of a two-tier labor system that shields older workers in Greece’s rigid labor market. Young Greeks earn a 500-and-change euro monthly minimum wage as older workers doing the same work make 700.
In contrast, immigrant-magnet Australia holds packed job fairs at its Athens embassy. In 2011, it took in 249,000 immigrants. In 2012, a 20% rise is expected.
In Italy, rigid markets are ruled by guilds known as the gerontocracy. With youth employment at 15%, surveys show 33% of young Italians want to leave.
Ditto Portugal. From 1998 to 2008, 7% of Portugal’s 10 million workers have quit, with the youth leaving fastest of all. In 2006, the World Bank warned that 13% of Portugal’s college grads had already left.
Meanwhile, Spain’s EFE News reports that the Spanish Embassy in Santiago, Chile, has seen a 10% rise in registered nationals to 48,000, while Chile reports a 25% rise in work permits issued to Spanish citizens.
It’s not just jobs that are penalizing Europe’s young. Housing is stacked against youth, too. Eurostat reports that in 2008, 46% of young European adults ages 18-34 lived with their parents — 51 million people.
The two-tier job market, which leans heavily toward unstable contract employment, affects housing choices for the young. Other socialist measures designed to protect current owners against the market also shut out the young.
Perhaps most hostile of all to youth are the EU’s outdated state pension systems — which force the young to pay the pensions of the old as the population shrinks.
In Italy, 14% of all economic output goes to pensions. It’s no coincidence that states attracting Europe’s young, like Chile and Australia, have privatized their social security systems that give youth a real shot at building personal wealth and a credible pension through their own efforts, instead of political favoritism.
So no wonder Europe’s youth are fleeing.
The big Greek aid package may correct some of Greece’s fiscal imbalances. But in the absence of free markets, it will only prop up socialism, whose greatest failure perhaps is to have no use for its young.
Unless socialism is eradicated, the bailouts will be useless and the young will keep voting with their feet.