Japan Chooses Young Workers Over Big Banks
Japanese Prime Minister Shinzo Abe announced last week that his country will spend 10.3 trillion yen—some $116 billion—to launch a Federal Reserve-style program of quantitative easing and infrastructure spending in an attempt to kickstart the Pacific nation's long-stalled economy.
The move, which will come despite a debt load seen as overwhelming by many international economists, arrives when the global conversation is tilting away from the austerity programs foisted on Greece and proposed for other indebted European countries since 2007.
Early this month, the International Monetary Fund released a report calling into question its past actions in the Euro crisis. The Wall Street Journal's Ian Talley wrote that “IMF Economic Counsellor Olivier Blanchard and research-department economist Daniel Leigh show the IMF recommended slashing budgets too fast early in the euro crisis, starving many economies of much-needed growth…While economists expected that cutting a euro from the budget would cost around 50 cents in lost growth, the actual impact was more like 1.50 per euro.”
In Greece, which radically cut its spending and trimmed its social safety net, the IMF’s turnabout comes too late. According to the latest figures from Greek statistics service ELSTAT, 56.6 percent of young people between ages 15 and 24 were unemployed in October, a rate nearly 30 percent higher than just three years ago. Public funding for Greek universities has shrunk 23 percent since 2009, forcing schools to leave buildings unheated and cut staff salaries. The dire situation left some Greek youth considering leaving their country for good.
That's why it's significant that Japan is putting money into its economy rather than taking it out. When an economy fails to grow, young people are hit the hardest. As Paul Krugman recently explained in an interview with Bill Moyers, “We have pretty good evidence on how long does it take to make up for the fact that you happen to graduate from college into a bad labor market. And the answer is forever… You’ll miss years getting onto the career ladder. By the time you get a chance to get a job that makes any sense, you know, that makes any use of your skills, you will already be tarred as somebody, ‘Well, you’re 28 years old and you haven’t held a responsible position?’ ‘Well, yeah, I couldn’t because there were no jobs.’ It just shadows your whole life.”
Japan’s stimulus package promises to dull the impact of a bad economy on its young people—and if it sees results, other countries could follow suit.
Zach Duffy is a reporter for Campus Progress. Follow him on Twitter @zachduffy.