The consequences of Europe’s rush to austerity will be long-lasting and possibly severe. If the euro survives, it will come at the price of high unemployment and enormous suffering, especially in the crisis countries. And the crisis itself almost surely will spread. Firewalls won’t work, if kerosene is simultaneously thrown on the fire, as Europe seems committed to doing: There is no example of a large economy—and Europe is the world’s largest—recovering as a result of austerity.
As a result, society’s most valuable asset, its human capital, is being wasted and even destroyed.
Young people who are long deprived of a decent job—and youth unemployment in some countries is approaching or exceeding 50 percent, and has been unacceptably high since 2008—become alienated. When they eventually find work, it will be at a much lower wage. Normally, youth is a time when skills get built up; now, it is a time when they atrophy.
Joseph Stiglitz, “After Austerity,” May 8 2012