By this point we all know things are bad in PIGS. But how bad, and why? Matthew O’Brien at The Atlantic included a simple graph in his argument that Spain is Beyond Doomed, charting the growth the long-term unemployed in Spain:
Anyone who has tried to do business in continental Europe — particularly Spain — knows that firing employees is effectively impossible. This can make businesses much more skittish when it comes to hiring full-time employees in boom times, favoring instead unprotected part-time contract labor.
And when I saw that chart, I was reminded of another:
This one isn’t as dramatic, but the underlying problem is the same: a regime that protects a group of established individuals creates a “permanent underclass” of those on the outside looking in. In Spain, permanent workers are almost impossible to fire or downsize, just like tenured faculty in the US higher education system. The result in Spain is an underclass of indignados chronically under- and unemployed; the result in higher education is an underclass of poorly paid adjunct faculty with few prospects of advancement.
Neither system is sustainable. Both discourage effort and innovation, driving talent away. In academia, many of the best students flee research and end up in industry. Leaving a country isn’t as easy.