Europe’s Not Working

[adios]

I think I'd change the title to The EU is Not Working.

From the article:

And across the Channel, recently re-elected British prime minister Tony Blair has made it his mission to open an economic debate across Europe. By adopting economic policies

much closer to America’s than to those of France and Germany, Britain has thrived over the last decade. The U.K.’s unemployment rate is half the continent’s, its growth has been almost twice the level of the Euro Zone, poverty is declining in Britain, and business creativity is rising.

Also:

Princeton economist Paul Krugman, when recently comparing Europe and the U.S. in the New York Times, wrote that: “The big difference is in priorities, not performance.” Krugman’s assertion is basically this: The income gap is not the result of lower efficiency in Europe. It is the result of Europeans working less than Americans. Not because they can’t find work, but because they work fewer hours, preferring to spend more time with their families and on leisure activities.

True, measured simply as GDP per hour worked, productivity is not much higher in the United States than, say, France. But what Krugman doesn’t mention is that America is close to full employment, whereas in Europe millions of poorly educated people can’t find an employer willing to pay them the artificially high minimum wage or willing to take a chance on such hires because they may be impossible to fire in the future. In other words, Europe seems to be so productive only because a large portion of its people are simply left out of the productivity statistics (and working life).

If labor productivity in Germany and in the U.S. continues on the same path as from 1996 to 2003, per capita income in Germany will grow by only 44 percent by the time American incomes double in 2026. Put differently, within a generation, Americans will enjoy twice the economic status that Germans do.

Even more ignorant is Krugman’s claim that Europeans work less because they choose to. While Europeans do love their five or six weeks of vacation per year, that’s a sideshow. The real problem in continental Europe is the involuntary unemployment of millions, because of economies that do not grow. That, not love of family or beach time, is the reason for the lower output and smaller incomes in European societies. More specifically, the U.S. labor market is much better equipped to integrate workers who may be disadvantaged— high-school dropouts, the very young, the very old, women, immigrants. Consider this: In the U.S., the employment rates for citizens and immigrants are virtually the same. In Germany, the working-age immigrant population doubled over the last 25 years, yet the number of immigrants with jobs didn’t rise at all. That failure to provide economic opportunity is one of the factors that has let Germany and other European nations become fertile soil for militant Islam.


Obviously the unemployment rate in Germany and France is very high. These countries are running significant budget deficits as well. Before we decry the U.S. consummer being spending crazy we might want to pause and think of some alternatives that aren't so appealing. The flow of money out of the U.S. due to fossil fuel consumption does need to be moderated, just not sure of the best way to do that.
Europe’s Not Working

[jaxmike]

This suprises you?

France and Germany are totally screwed. The only hope for the people of those nations is a revolution.

[Arnfinn Madsen]

Northwestern Europe and parts of Eastern is functioning well, but many continental western countries have serious problems.

[jaxmike]

[ QUOTE ]
Northwestern Europe and parts of Eastern is functioning well, but many continental western countries have serious problems.

[/ QUOTE ]

Interestingly there might be a correlation between support for the US and it's policies and the economies of the nations in Europe.

[MtSmalls]

Straight comparisons between the economies of Britain and Germany are at this point silly to the point of being stupid.

Germany is still integrating the five regions of the former East Germany, along with absorbing the influx of refugees from Serbia and Czechoslovakia (and Turkey BTW). Unemployment in Germany is higher than in the UK, and the US (though not as much higher once you account for the percentage of the US workforce that has been discouraged from looking for a job, members of the workforce 10 years ago. This adds about 2.5-3% to our unemployment rate).

There are some structural problems in the Continent's labor system. But employers are getting nearly the same output per worker that US companies are, but the employees have twice the vacation time (if not three times).

And remember, in both the UK and the Continent, there is UNIVERSAL HEALTHCARE....

to say that there is any connection between economic growth and "Support for the US and its policies", is simply retarded

[jaxmike]

[ QUOTE ]
Unemployment in Germany is higher than in the UK, and the US (though not as much higher once you account for the percentage of the US workforce that has been discouraged from looking for a job, members of the workforce 10 years ago. This adds about 2.5-3% to our unemployment rate).

[/ QUOTE ]

Even still, this doesn't even come CLOSE to the level of unemployment in Germany. Their economy is going to collapse eventually, every socialist economy will eventually collapse, it always has. Why do you think China is switching to a free market system?

[ QUOTE ]
There are some structural problems in the Continent's labor system. But employers are getting nearly the same output per worker that US companies are, but the employees have twice the vacation time (if not three times).

[/ QUOTE ]

Ahh, manipulation of statistics. First, American workers get more done per hour than do German workers.

True, measured simply as GDP per hour worked, productivity is not much higher in the United States than, say, France

Second, American workers work more hours than do German workers.

The income gap is not the result of lower efficiency in Europe. It is the result of Europeans working less than Americans... But what Krugman doesn’t mention is that America is close to full employment, whereas in Europe millions of poorly educated people can’t find an employer willing to pay them the artificially high minimum wage or willing to take a chance on such hires because they may be impossible to fire in the future. In other words, Europe seems to be so productive only because a large portion of its people are simply left out of the productivity statistics (and working life).

Read the damn article, it tells you that.

a substantial and growing minority is shut out from the labor market permanently through absurdly high minimum-wage requirements and overly strict regulations (like the employment protection laws that can make it almost impossible to fire people)

Raising minimum wage is a very ignorant thing to do. Raising it artificially raises all wages as people expect to get paid more for doing more than menial work.

[ QUOTE ]
And remember, in both the UK and the Continent, there is UNIVERSAL HEALTHCARE....

[/ QUOTE ]

So? What difference does it make when you have to pay insane taxes for shoddy healthcare?

How many French died from the heat last year? What does that say about their "healthcare" system?

[ QUOTE ]
to say that there is any connection between economic growth and "Support for the US and its policies", is simply retarded

[/ QUOTE ]

First, I didn't say that. Second, notice the nations that support the US. What do most have in common? A free market economy. Those nations, following our lead, are mostly thriving. The, look at those nations that oppose us (in this case France and Germany). Now, look at their differing economic policies and what it has brough them... I never claimed that there was a correlation, it just seems to me that there might just be one.

Here is the link to the article again if you would like re-read it and discuss it further.

linky

[MtSmalls]

I read Krugman's article when it was first published a few weeks ago.

Unemployment in West Germany, is NOT subtantially higher than the adjusted US unemployment. Unemployment in EAST Germany, more than 15 years after the reunification, still runs in the 20% range. When you add them together, it raises the national average, and you are in effect comparing apples to oranges. The only US comparison to this would be to look at unemployment figures for a decade or so after the Civil War.

[ QUOTE ]
GDP per hour worked, productivity is not much higher in the United States than, say, France


[/ QUOTE ] So, in essence if French workers gave up their 35 hour work weeks and six weeks of vacation, they would have roughly the same GDP growth as the US. But they choose family life over work life. Isn't that a "Family Value"???

Minimum wage laws are a trade off between unfettered free markets and the social good. (Referred to frequently in government circles as the 'social contract'). in the 1800's there were no minimum wage laws in the US, no child labor laws and the industrial barons got richer off the backs of the American worker. There was virtually no middle class, the backbone of society. With the advent of the Unions and labor protection laws, the number of families living in poverty dropped drastically.

In the 1960's LBJ's policies dropped the number of American's living in poverty from 20+% to just over 10%. Over the last five years, the number of Americans living in poverty INCREASED every year.

Are minimum wage laws and labor protection laws a distortion on pure, unfettered capitalism. Yes, of course they are. They are also critical to the well-being of the average American (or worker if you want to internationalize).

Universal Healthcare is a similar distortion, as the employers directly pay (the consumers actually indirectly pay of course), which is why I brought it into the discussion. Yes, there was a high death toll in France during the last two heat waves. Was it due to their universal health care system, or the fact that their turn of the 19th century buildings haven't been fitted for air conditioning???

With more than 40 million Americans without healthcare coverage, ask them if they'd rather have "shoddy healthcare" or none at all. And, it doesn't seem to be all that shoddy, since every country in Europe spends LESS PER PATIENT than we do here....

[sam h]

[ QUOTE ]
Even still, this doesn't even come CLOSE to the level of unemployment in Germany. Their economy is going to collapse eventually, every socialist economy will eventually collapse, it always has. Why do you think China is switching to a free market system?

[/ QUOTE ]

Germany has troubles, but these are mostly due to unification and a rocky adjustment to global pressures. The same system you are lambasting was one of the highest performers in the world from 1950-1980. It needs to be reformed, but nobody who really studies Germany thinks they should adopt a US-style model.

It is also not in any way a "socialist" system of political economy.

[ QUOTE ]
Why do you think China is switching to a free market system?

[/ QUOTE ]

Regulation and government intervention in China's mixed economy has still been much more onerous than in Germany over the last two decades. Clearly, it has doomed development there, since they have only been growing at an average of 10% over 20 years, the highest long-term rate in world history.

[ QUOTE ]
Second, notice the nations that support the US. What do most have in common? A free market economy. Those nations, following our lead, are mostly thriving. The, look at those nations that oppose us (in this case France and Germany). Now, look at their differing economic policies and what it has brough them... I never claimed that there was a correlation, it just seems to me that there might just be one.

[/ QUOTE ]

Even were there a correllation here, that would not demonstrate a meaningful causal relationship. But is there a correllation? England's economy is still in many ways weaker than the continental powers, a result of decades of mismanagement and reliance on empire during the 20th century. Spain no longer supports us, so I guess they don't count. The (recently) stronger economies of Asia - like China, Taiwan, Thailand, Korea, and Malaysia - are not big supporters of US foreign policy. Our biggest supporters in Latin America are Colombia, El Salvador, and Nicaragua, which are all economic basketcases.

So I guess the answer is no.

[nicky g]

[ QUOTE ]
[ QUOTE ]
Northwestern Europe and parts of Eastern is functioning well, but many continental western countries have serious problems.

[/ QUOTE ]

Interestingly there might be a correlation between support for the US and it's policies and the economies of the nations in Europe.

[/ QUOTE ]

That the guy includes Italy in his list of economic basket cases kind of undermines your argument.

[nicky g]

"So? What difference does it make when you have to pay insane taxes for shoddy healthcare?

How many French died from the heat last year? What does that say about their "healthcare" system?"

France and Germany have extremley good healthcare systems. In 2000 the World Health Organisation ranked France's as the best in the world. The death toll from the heatwave had nothing to do with the healthcare system any more than the death toll in New Orleans has to do with the US health care system.

If to you want an example of a poorly performing centralised state healthcare system a better place to start would be here in the UK, although it seems to be improving slightly.