Economic fallacies: 'Eurosclerosis'

Is this Eurosclerosis?

Jumping around through the net I just stumbled upon what looked a pretty and forgotten jewel of vocabulary: Eurosclerosis. It has a Wikipedia entry (half-referenced) and what not! 

I was briefly seduced by the potential illustrative meanings of this word: it would of course mean a hybrid of Jacques Delors, Silvio Berlusconi and Angela Merkel, a morph of all the old people living on EU salaries just to spit on Europeans and lick banksters' boots. Surely someone looked at the unpopular Commissioners babbling before the grey and pointless Parliament and caught by a hellish (but way too real) vision of Margaret Thatcher having tea with Pinochet conceived such a horrific but descriptive concept: Eurosclerosis.

Too good? Maybe it was something more prosaic and just meant the tendency to have a thicker layer of old people, or an increasing waistline, following the US fashion?

Nope it is an idea from liberal (pro-market, anti-state) economists describing an economic problem: why Europe (or some states in Europe) experienced nominal (GDP) economic growth while not reducing unemployment. According to an unreferenced (but plausible) ideological remark at the end of the wiki-article:

The term was originally coined by German economist Herbert Giersch to describe how overregulation and a generous welfare state will undermine efficiency and job creation.^{[citation needed]}

Hold on! 

The perfect example of Eurosclerosis would be Spain, where nearly no welfare (other than pensions, extremely brief unemployment benefits and general healthcare) exist, where salaries are very low (in comparison with, say, Germany, France, the UK or Italy) and where labor rights were destroyed in the 1980s (by the so-called Socialdemocrats, mind you) up to a point that, in practical terms, total deregulation in relation to labor exists now. 

Spain is an almost totally deregulated market yet unemployment is over 20% and used to be very high even before the latest crisis, always about double than elsewhere in Europe in spite of having a less regulated labor market and much worse welfare. 

So Spain is the perfect example of Eurosclerosis but it does not respond to the liberal analysis of that Giersch guy. Would it be that deregulation in the job market alone would (magic, whoa!) create jobs, Spain would have no or almost no unemployment. The opposite is true. In fact Spain has a very weak economy in spite of a very high growth of GDP precisely because it lacks a solid welfare state. 

Regardless of the benefits for workers and social stability. Well understood welfare, for instance oriented to guarantee cheap basics (housing, healthcare, education, electricity, water, sanitation, low-times economic parachutes) for all, reduces costs country-wide. Workers need less money, so they can also work for less, becoming more competitive. 

Another way of increasing competitiveness (also applied by the alleged success story of Europe: Germany) is to specialize in more expensive products, typically more technologically rich or of higher quality). This requires investment in R+D and a non-corrupt environment that offers quality and seriousness guarantees. While for example there is some investment on that in the Basque Country or Catalonia, Spain as such mostly passes of that stuff (it's sociological, I believe). 

But still that does not explain the massive lack of jobs. The only thing that explains Spain's Eurosclerosis is that liberalism, free market, does not work: that it is a lie. No matter how much you dump your work's price, there are no jobs.

It's not just Spain: it's worse in North Africa, where unemployment reaches 40%, plus all the youths who have been forced to emigrate, risking their lives, to Europe and elsewhere. These are cheap-labor countries, typically with all the business-friendly policies you can imagine, even corruption is not that high considering how poor they are and how autocratic are their governments.

So it has only one explanation free market is a lie. 

And this brings to only two possible proactive conclusions:

Under Capitalist ("free market" lie) conditions:

1. Restore welfare, make sure that the cost of life is low, so people do not need so much money just to live that they cannot work for less. 
2. Very specially make sure that your people's needs do not become a market for foreign "investors" (bloodsucking speculators that take all and leave nothing) but that they produce what others need. Import little, export much - at least as much as you import. 
3. Tax as needed: if you are a net importer, global markets are not your friend. 

If you can escape Capitalist conditions, do it. Some free market (where a very high number of dynamic independent actors can be guaranteed) may be useful locally but oligopolistic "markets" are no markets at all and must be avoided. Better a "bad" state monopoly than a truly much worse private oligopoly (or often monopoly as well). Private monopolies are no better than public ones, they are typically much worse.