The fact that this has been occurring for so long points to a
deep malaise in European societies that the Euro crisis has only
served to exacerbate and has raised a host of serious issues
European lawmakers must address beyond short-term economic and
According to Eurostat, in much of Eastern
Europe, the percentage of the population categorized as "at
risk" of poverty after receipt of social
transfer payments was above 20 percent in 2010. In Italy and the
United Kingdom, that percentage was 17 and 18 percent,
respectively, with the European average being above 16 percent.
There has been little improvement since 2010.
Unemployment rates have risen consistently in Europe
since 2008 (apart from a brief leveling off period in 2010) and
reached a new high of 11.8 percent in December 2012. Youth
unemployment is approaching 60 percent in Greece and Spain while
approaching 40 percent in Italy and Portugal. Among the
long-term impacts of this unbelievably high unemployment is a
brain drain among the young.
Social Entitlements and Taxes
On top of unemployment rates is the corresponding older
population over time. In societies where governments have made a
social compact to provide a broad range of long-term
entitlements, this spells looming disaster. Eurostat notes that,
since 1960, the percentage of citizens over age 65 has tripled,
from 10 to 30 percent. Elderly benefits account for nearly 40
percent of average social spending among the EU–27 governments,
with health care taking nearly 30 percent of the pie. The
traditional tax base of these countries is declining while the
number of individuals dependent on entitlements is rising.
2009, expenditure on social protection accounted for 30 percent
of gross domestic product among the EU–27 governments, compared
with approximately 18 percent in the United States and 7 percent
in China. Total expenditures have outpaced total revenue among
the EU–27 since 2000, with the gap having increased
significantly, beginning in 2008.
Also according to Eurostat,
between 1995 and 2010, total taxes among all European
governments dropped an average of 2 percent, with some countries
losing as much as 5–6 percent of their tax base during that
time. Overall, European tax rates on corporations declined more
than 8 percent, and labor taxes were down more than 3 percent,
between 2000 and 2010. European governments have responded by
raising value added tax rates, environment taxes, and other
forms of taxes in an effort to counter the revenue decline.
The corresponding gradual erosion of
standards of living in Europe has manifested itself in a number
of other ways, including increasing crime rates, tougher
immigration laws, and a backlash against minorities and
immigrants. The popularity of radical right parties has risen
dramatically across Europe since the 1980s, even in countries
that have not been the worst affected by the economic crisis.
For example, according to the Friedrich-Ebert-Stiftung Forum, in
Belgium, far-right parties took 1 percent of the popular vote
between 1980 and 1984, versus 14 percent between 2005 and 2009.
During the same period in Norway, the figures were 4.5 versus
22.5 percent, and in Switzerland, 3.8 versus 30 percent.
greater percentage of the population throughout Europe is
becoming increasingly disillusioned with what the post-war
social, financial, and political compact has produced and are
seeking alternatives that are more radical. Previously "fringe"
political movements have benefitted while the political center
is increasingly being eroded by candidates and parties catering
to people's worst fears and darkest visions. Europe's middle
class is slowly eroding. People are losing hope. Their sense of
security is disappearing. The notion that a better future can be
achieved through a painful present is increasingly being
In Europe, new political divisions are emerging.
It is no longer simply a question of left versus right or
nationalism versus xenophobia. Today, the choice is increasingly
between old world versus new world and a future that envisions
participation in the European Union versus one that does not.
Voters are likely to support candidates who can demonstrate
political sobriety, realism, common sense, and a break from the
past. As the crisis endures, and the solutions pursued continue
to fail to produce lasting and meaningful change, there is a
rising risk of civil disobedience, street demonstrations, and
Many analysts continue to focus on the
economic and fiscal manifestations of the Euro crisis, while the
social and political implications—which are every bit as
important—seem to garner less attention, yet are having a
profound impact on when, if, and how the crisis gets resolved.
The crisis is multifaceted and more than likely has another 5–10
years to play out. Europe must address its long-term political,
economic, and social demons in a realistic and common-sense
fashion. It will do Europe little good in the long term to
forcefully address its fiscal and economic challenges without
simultaneously addressing its daunting social and political
problems. The risks of not doing so are rising.