"No obstacles are insurmountable when God commands and we obey"
- - Heber J. Grant
July 16, 2013
Europe's Future
by Adam Smith

The economic news out of Europe is bad and getting worse. The most devastated country is Spain, with an unemployment rate of 27% (that is not a typo). The unemployment rate for the entire European Union is 11%. This is with the youth unemployment rate in some areas as high as 50% (again, not a typo). America begins to look absolutely great in comparison.

How did Europe get in this condition? Are there any lessons for Americans to learn?

The mentality of the European is much different from the American. For centuries and centuries, the Europeans lived in a caste system. This means that the economic sphere that you were born into was going to be the sphere you lived your whole life. And your children, and their children, and their children, in perpetuity.

There was almost no chance of improving your impoverished circumstances.

Eventually as society and communication progressed, those that were being held down by the economic system revolted. The French Revolution is one example of this.

Capitalism was tried, but there were great abuses of the masses by the companies. Long hours, physically abusive supervisors, and meager wages were the norm for your average worker. While this was a different system, there was a still a great divide between the rich and the middle class.

This is the economic climate in which communism came into being. It is quite easy for Americans in the 21st century to scoff and ridicule those that actually expected utopia to arise from the implementation of the communist economic system. For the masses it was hard to see how things could get worse.

Communism was a great political force in all of Europe, starting from about 1910. The communist takeover of Russia and then Russia’s attempted exportation of communism to most countries in Europe has had a lasting effect.

To appease the masses, most European countries in the 20s and 30s passed laws that today we would call socialistic. Free healthcare for everyone, homes for everyone, food subsidies for families were the norm, and many people wanted more. They wanted the government to take over all business and control the economy of the country. They were tired of being at the bottom. All they wanted was to live a comfortable life.

To protect their countries from communism, Western Europe embraced the fascists from Germany and Italy as an eastern border protection from the spread of communism. Europe paid dearly for this error.

As it turned out, things under communism could be worse than capitalism. It was later learned that tens of millions died of starvation under the rule of Stalin and Mao.

After the Second World War, the European countries continued to expand their socialist governments. They were able to afford this expansion because of the U.S. defending Europe against any advancement of the Soviet Union. European countries eliminated most of their defense spending and expanded government programs.

This brings us to where Europe is today. Many European governments pull too much money out of their economy for redistribution and also highly regulate all commerce within the country. It is very difficult to fire or lay off employees, wages are regulated, and holidays and vacations are governed by law.

So what you have are stagnant economies where there is little new hiring (high youth unemployment) and when there is an economic downturn and companies go out of business the economy does not have the vitality to come back and create more jobs for those that were lost in the downturn.

What does Europe do now? They have no faith in capitalism, and socialism is leading them to a bankrupt future. In my opinion, the only question is what kind of government and economy will rise from the ashes when the inevitable day of reckoning is reached. Let us pray that this transition will be peaceful and be a blessing to the people.

The collective memory of most Americans is much different. We expect to be able to move up the economic ladder. We expect our children and grandchildren to be able to pursue whatever profession they feel inclined and be able to succeed. Government interference in those expectations is met with a virulent backlash by the people. We want more than to just live a comfortable life. That is just who we are as a society.

What can we learn from Europe?

Avoid class warfare rhetoric. Some politicians like to play the rich against the poor. In America, those that are rich today may have much more humble circumstances in the future, and those that are poor can quickly rise to being wealthy. America does not have a caste system. Those politicians that talk like we do so they can try and pass socialist policies need to be repudiated.

Next is to make sure everyone has access to the economy. Too many minority communities in America do not have appropriate access to education and an understanding of what is possible. As time goes by and nothing improves for these people, generation after generation, they become susceptible to the communist/socialist rhetoric — just like the European masses.

Companies need enough freedom to move and improve but not so much that they can abuse. America is quickly becoming a completely regulated economy. It has helped stagnate Europe’s economy and it will do the same to ours.

Those unemployment rates from Europe look almost unreal to us Americans, but we are just one negative jolt to our economy from seeing them realized here. And if America takes another downturn, then we will see the crash of Europe and what will arise in its place.


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About Adam Smith

Adam Smith is obviously not the actual name of the author of this column. The real author has worked for two Fortune 500 companies, one privately held company, and a public accounting firm. His undergraduate degree was in accounting, and he earned an MBA for his graduate degree. He also has completed coursework for a PhD. in finance. He continues to be employed by one of the Fortune 500 companies.

The author grew up in the Washington D.C. area but also lived for several years in Arizona. He currently resides with his family on the East Coast.

The author has held various callings in The Church of Jesus Christ of Latter-day Saints.

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