About the author
Evan Hill
TI Youth Observer
2024 was a year of turbulence. Over 70 global national elections, the advent of AI, and a shifting economic paradigm created an environment that severely disabled the job market for people, particularly the younger generation, across the globe. This trend is not unique to a single country or culture, but reflective of a larger paradigm shift in the global economy as the world transitions into a new shape.
To fully understand the state of the shifting world, we must establish the base facts. The list of nations in the world is too large and diverse to fully extrapolate on in a single, digestible article, so for brevity, the three largest economies, the US, China, and Germany, will serve as crude indicators of archetypes demonstrating the "collapse at the top."
Problems
The US, the world's largest economy, has a superficially strong growth performance, though this comes with many asterisks. Though economic and employment numbers appear good on paper, what remains unreflected in these statistics are employment quality, consumer savings, and stability. Approximately 50% of Americans currently perceive themselves as living paycheck to paycheck,1 the cost of living skyrocketed over 5% and 8% in 2022 and 2023 respectively,2 and the US national debt sits at a whopping 36 trillion USD, all clear indicators of a system in need of reform. There currently exists uncertainty into which direction the US will pivot, if it does, and if the nation will implement aggressive tariffs on imports in an attempt to "bring industry home."
China, the world's second-largest economy, possesses strong manufacturing capabilities, but struggles to cope with tariffs (in the form of friendshoring, derisking, decoupling, nearshoring, or one of many other jargon terms). Burdened further by an approximate 20% youth unemployment rate,3 China possesses on paper perhaps the most shocking numbers, though this may not be totally indicative of near-future potential when examining market projections, active industries, and room for correction.
Germany, the world's third-largest economy (overtaking Japan in 2023), faces a dire situation mirrored superficially by many other European nations. Though once the most productive European economy, rising costs and a lack of adaptation in the face of a new normal have thrown the country into existential crisis. With a 0.1% GDP contraction in 2024,4 things already looked grim for Germany, but the advent of mass produced, cheap, and high-quality electric vehicles presents a significant hurdle for an economy deeply invested in combustion automobile engineering. The German automotive industry employs over 750,000 people, accounts for 17% of all German exports, and is undergoing drastic and severe layoffs.5 A probable collapse or drastic downsizing of the combustion automotive industry in the face of cheap new electric vehicles presents a massive, possibly unsolvable hurdle for Germany.
Solutions
The point of outlining these issues is not to sound the pessimistic bells of doom and gloom without a proposal for solution, but to acknowledge that tangible issues which disproportionately affect the economy, and by extension the youth labor market, exist.
Despite the sobering realities and issues facing the three largest economies, bright spots do exist. The situations confronting the world are superficially not unsolvable, but mustering the political will to enact change presents challenges.
The US
The US has many tools at its disposal, but internal pressures and complicated, occasionally conflicting agendas within the nation make it the least predictable of the big three economies. The exact shape of US economic policy post-2024 presidential election is not yet clear, though markets appear initially optimistic, with November 2024 being the most successful month of the year for the S&P 500.6 The returning president's rhetoric indicates he plans to implement tariffs, though of what exact depth and scale is unsure.
Tariffs, whilst not inherently bad, must be carefully balanced. The implementation of import duties on products is a necessary measure in some cases to prevent dumping and countervailing by bad actors, but accusations of dumping are frequently used to justify ruinous taxes to protect noncompetitive domestic industries. Whilst the protection of domestic industries is a good thing, the glaring issue remains that every protected industry noncompetitive in price is a cost squarely placed on consumers. This cost is exacerbated further by the impossibility of exporting noncompetitive products. This is not an indictment of tariffs wholesale - they are an item countries should retain a right to implement, but should be a solemn, precise measure not undertaken lightly.
America is a land of tremendous promise and opportunity. Signals for what the future may bring are presently uncertain, but the revivification of a high-end design and service-based economy (think Apple products designed in California) would be ideal. Bringing manufacturing (at least human manufacturing) back to the US en masse would be difficult, as price differentials for the labor market make US manufacturing unfeasible without burdening consumers with ruinous price hikes. Financialization and the divorce of stock market performance from the lived experience of many Americans are the key problems the US must confront. Conventional wisdom dictates a transition to a tangible real economy and away from speculative high financial games is a solid approach. Whimsical manipulation of financial products and broad slipshod tariffs do not create jobs, protect national interests, or represent a cohesive long-term economic strategy. The US has all the tools and pieces it needs to truly prosper - the only question is whether it will be able to successfully implement changes in a time of political and economic divisiveness.
China
China's shocking 20% youth unemployment rate is terrifying on the nose, and though the country struggles to fill this gap, the tools and political will to fix this issue appear eminently present. China's transition to a mixed service-manufacturing juggernaut has not been without road bumps, but the end result is a powerful economic engine. Public indications from the highest levels of the Chinese government indicate awareness of the unemployment issue and interest in providing "high quality jobs" to the upcoming generation of young Chinese citizens, which historically signals China has prioritized the issue.7 Though China currently has the highest youth unemployment rate among Germany, the US, and itself, an abundance of manufacturing infrastructure, growing ties to Global South nations as import/export partners, repeated emphasis on the real economy, massive domestic markets, and a political will to combat unemployment oddly simultaneously position China as the country with perhaps the brightest economic outlook of the "big three" in the near future.
Germany
Despite having the lowest youth unemployment rate of all EU nations at 6.9% (much stronger than the disheartening EU average of 15.2%), Germany faces tangible threats to its overall economic future.8 Germany faces perhaps the least optimistic outcome of the three largest economies - potentially bereft of a core manufacturing "real economy" built on automobiles. Germany, like much of the rest of Europe, must pivot. A regression to a second-world manufacturing economy is possible, but the economic hardship and tangible damage this would inflict upon its citizens make this proposition untenable. For Germany and much of the rest of the EU, the question is not merely about improving youth employment, but salvaging and transforming their economies on a very short timeline.
It is worth noting again that Germany, or almost any other highly developed economy regressing to a second-world nation would entail drastic currency devaluation to compete with existent developing nations, which would bring with it ruinous inflation, wealth destruction, and potentially chaos in the streets as capital flees and people see an almost inhumane drop in life quality. Germany must find a niche that it fulfills - one that does not involve combustion engines. The exact direction this will take remains unclear.
The Elephant
The elephant in the room when discussing youth employment is the fundamental reshaping of international economic policy and associated risks as the world moves into a mature stage of economic globalism. Tempting as it may be to argue that we should move away from this globalist paradigm, the blunt truth is that this genie simply cannot be put back in the bottle. Developed nations have become accustomed to prices reliant on inexpensive manufacturing in less developed nations. The implementation of blanket tariffs on manufacturer client states may sound good superficially, but when we look at the practicum, forcing a 300% increase in manufacturing costs (a realistic number given the general disparity between manufacturing costs) due to relocation to another nation effectively equals at least a 300% increase put directly on consumers (imagine all shoes triple in price overnight). Without mincing words, this would be an unmitigated disaster. Inflation, cost of living, and the very sanctity of the currency in question would be subject to collapse as wealth is destroyed en masse and people become unable to afford basic goods.
This is, again, not a condemnation of tariffs, but a reminder that they must be implemented with purpose and precision - not slipshod heavy-handedness. The manufactured world order has long been built on consumer (rich) and manufacturer (poor) states - for better or worse, this paradigm is now shifting. What is important is the need to acknowledge this change, and adapt to it. As mentioned before, it is unthinkable to allow first-world economies to devolve into second-world engines - we must instead focus on finding productive ways for developed nations to contribute tangible value by gainfully employing their young citizens (also known as a real economy). Developed nations provide top-tier professional services and design - they should lean into this. Scale manufacturing in developed nations is simply not feasible, and will only lead to the destruction of wealth for the richest segments, and poverty, unemployment, and inhumane hardships for everyone else.
For the Future
We unfortunately live in a time of great upheaval, both social and economic. Changes throughout the world, along with possible impending global economic collapse, have put tremendous pressure on the existent system.
It is important to note that these problems cannot be solved by a lone actor. Despite the fragmentation in the world, for the sake of the youth, the international community must find a way to positively redefine a new economic order that works for everyone. This will not happen overnight, and will likely entail a long process of restructuring, negotiation, and the inevitable pitfalls that come with complex multi-piece operational redefinition, but at our current juncture, there is no other option. Almost all countries have some colloquialism about the youth being the future - for the first time in many years, living up to this is now hard. If there was ever a time to put resources where the rhetoric is, it would be now.
1. "Paycheck to Paycheck: What, Who, Where, and Why?," Bank of America Institute, October 22, 2024, https://institute.bankofamerica.com/economic-insights/paycheck-to-paycheck-lower-income-households.html.
2. "Cost-of-Living Adjustment (COLA) for 2024," Kerr, Robichaux, and Carroll, accessed December 17, 2024, https://www.portlanddisabilitylaw.com/cost-of-living-adjustments-cola/.
3. "National Statistics," National Bureau of Statistics of China, accessed December 17, 2024, https://data.stats.gov.cn/.
4. "Economic Forecast for Germany," European Commission, November 15, 2024, https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/germany/economic-forecast-germany_en.
5. Chris Westfall, "Europe's Richest Economy Struggles as Layoffs Rock the Auto Industry," Forbes, December 4, 2024, https://www.forbes.com/sites/chriswestfall/2024/11/25/europes-richest-economy-struggles-as-layoffs-rock-global-auto-industry.
6. Adam Shell, "Stock Market Players Hope 'Trump Bump' Will Continue," Investor's Business Daily, December 6, 2024, https://www.investors.com/etfs-and-funds/personal-finance/stock-market-hopes-trump-bump-will-continue/.
7. Mia Nulimaimaiti, "Xi Jinping Wants 'High-Quality Jobs' for China's Struggling Youth," South China Morning Post, November 1, 2024, https://www.scmp.com/economy/china-economy/article/3284805/xi-jinping-wants-high-quality-jobs-chinas-struggling-youth.
8. "EU Unemployment Rate." EU unemployment rate - German Federal Statistical Office. Accessed December 23, 2024. https://www.destatis.de/Europa/EN/Topic/Population-Labour-Social-Issues/Labour-market/EULabourMarketCrisis.html.
This article is from the November issue of TI Observer (TIO), which re-examines some of the key developments in 2024, analyzing the characteristics of this transitional period, sharing insights on its trajectory and direction, and exploring the opportunities and challenges ahead. If you are interested in knowing more about the December issue, please click here:
http://en.taiheinstitute.org/UpLoadFile/files/2024/12/31/14452169dd313728-8.pdf
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