Are We Going to Become Like Europe?
This is Scott Sumner at TheMonyIllusion:
Keep the following in mind:
1. The progressives completely failed to predict that the natural rate of unemployment in welfare states like France would rise from about 3% prior to 1973 to about 10% after 1980, and then stay up there permanently.
2. To this very day, the progressives have no plausible explanation for why this happened in many European countries (not all.)
I’m not saying it will happen here, but I’m also not assuming it won’t. All I do know is that we should pay no attention to what progressives say on this subject, as they are so blinded by their romanticizing of “victims” that they’ve lost the ability to think clearly about labor market issues. Ignore them.
If Obama gets his way we will become exactly like Europe.
I agree with Bruce.
Europe is a nice place to visit, but I wouldn’t want to live there. It’s difficult to get a job if you don’t have one; and difficult to lose a job if you do. Jobless benefits are generous if you don’t have a job; the payroll taxes are onerous if you have one. Those are precisely the wrong incentives to encourage productivity.
I agree with Buster. Great place to vacation. Bad place to live.
Germany and maybe one or two of the Scandinavian countries could offer some hope for the future in the way of reforms that loosen market and labor regulations, free up capital to increase employment, empower the private sector, etc.
But I think it’s all downhill for France, Italy, and Spain. I don’t think those countries will have the political courage to institute enough of the right reforms to save their economic futures. We may end up seeing a strengthening of the E.U. and coalescing of labor laws, regulations, structures, etc……not sure what the status quo is now,I need to research that subject more.