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EU unemployment is a problem. | 70 comments (70 topical, editorial, 0 hidden)
Re: EU unemployment is a problem. (none / 1)
But there are two sides to the story - supply (productivity), and demand (consumption, investment, exports, government spending).

If aggregate demand keeps up with productivity growth, you don't have an unemployment problem.

Part of the joint problems both the U.S. and European economy face is global industrial overcapacity -- productivity in the global economy is outrunning global demand.

In the U. S. this (along with political factors) shows up as a redistribution of income from wages to profits, slow-growing wages, and rising inequality. In Europe it shows up more as unemployment and insider/outsider problems.

That's why any left economic program has to have reform of international trade and financial institutions as part of it.

by TGeraghty on Tue Mar 28th, 2006 at 09:19:46 PM EST
[ Parent ]
Re: EU unemployment is a problem. (4.00 / 2)
Exactly.

Of course, one complementary problem is that we're not sure the Earth can cope with giving everyone the ability to demand on the same level as US citizens.

The other question I have is that if the 1970s saw overcapacity coming out the fact that the US, Europe and Japan/Korea were all pumping out more goods than they could buy, doesn't this suggest there are major demand problems, even before you add China and India to the mix (who have much stronger supply than demand at the moment.)

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 02:48:25 AM EST
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Re: EU unemployment is a problem. (none / 0)
Yes, and yes.
by TGeraghty on Wed Mar 29th, 2006 at 02:51:16 AM EST
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Re: EU unemployment is a problem. (none / 0)
I believe the technical term for my reaction is:

Oh bugger.

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 03:23:27 AM EST
[ Parent ]
Re: EU unemployment is a problem. (4.00 / 2)
I guess I'm one of those "cornucopians" or whatever they call us -- I have faith that human ingenuity will allow those countries to maintain growing living standards without exhausting planetary resources.

It's not much more than faith, though.

It would help if the rich countries started thinking along the lines of qualitative growth. There really needs to be a whole ecological sustainability agenda integrated into all of this employment and growth stuff we've been talking about.

by TGeraghty on Wed Mar 29th, 2006 at 03:38:53 AM EST
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Re: EU unemployment is a problem. (none / 0)
I definitely agree about qualitative growth.

I guess the other thing we have to do is join up all your diaries into a platform and start pushing it at progressive political parties.

Interesting question, would you consider the deficit/credit fuelled US boom as an attempt to address the demand problem?

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 03:48:38 AM EST
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Re: EU unemployment is a problem. (none / 1)
We don't need even more demand in industrialized countries, but to raise the standard of living (and demand) in the third world.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Wed Mar 29th, 2006 at 04:00:50 AM EST
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Mmmphmm. (none / 0)
I know you mean well, and I agree, but it sounds... condescending somehow. "We" don't need to raise the standard of living in the third world for them - that's reaching back to imperialism. We want them to do it themselves - even if we don't agree how that turns out for us. Based on what I've heard from expats living there, at least in countries in the horn of Africa, humanitarian aid from the west is a politically exploited tool, and one that by enlarging the "pity factor" during a crisis stymies the motivation to independent development. Europe and the rest of the western world are their heart machine which kicks in action whenever the next best crisis looms - and it comes for free. Countries practically count on the hand that feeds.

The current drought in eastern Africa is different, but only a little.

by Nomad (Bjinse) on Wed Mar 29th, 2006 at 04:55:48 PM EST
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Re: Mmmphmm. (none / 0)
Right. I don't mean "we in the west" but "we all".

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Wed Mar 29th, 2006 at 05:05:28 PM EST
[ Parent ]
Re: Mmmphmm. (4.00 / 2)
Well, I've heard that view from some expats.

But, at the same time, they rarely back it up with proposals to stop the Western (government and corporate) stanglehold on the economies of said nations. Thus, whilst it sounds very righteous to say that these people are "spoiled by charity" it's not clear that any proposal for them to develop survival without charity is being made.

Amartya Sen said it best, the market mechanism for dealing with a food shortage is... starvation...

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 05:07:59 PM EST
[ Parent ]
You too? (none / 0)
Perhaps we know the same expats, non?

And that's the crux of it, of course. Decoupling the humanitarian machine instantaneously means starvation - but not for the bastards with the gold teeth and in their palaces who keep plying the milk machine. Always the innocent first, assemble in lines of three.

But should "we" instead hand them the brilliant survival plan for the future? Isn't that similarly wrong as also here the tickling of motivation is completely absent? Part of the reason why products in communist countries were crappy because no one was motivated enough to do it right themselves...

What a fix.

by Nomad (Bjinse) on Wed Mar 29th, 2006 at 05:16:35 PM EST
[ Parent ]
Re: You too? (4.00 / 2)
Well, I agree that we cannot "hand them the plan." But there are things we can do:

a) Stop handing them the arsenic, as it were.

b) Set a good example, by implementing sensible rather than wingnut policies here (and indeed stop promoting wingnut ones through the IMF etc.)

c) Hand them the ideas, we are a think tank after all. I'd like EuroTrib to one day be the seed of AfricaTrib!

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 05:32:43 PM EST
[ Parent ]
Re: EU unemployment is a problem. (none / 0)
Debt does have that effect, although it is a deeply perverse way to address the problem.

The US deficit is caused by the Bush tax cuts, which is part of the overall conservative strategy to redistribute income upward. The tax cuts do raise demand, but you could get bigger bang for the buck in other ways if that was your first priority.

I think the explosion in consumer debt is an attempt by households to maintain living standards in the face of incomes that are growing only slowly, or even shrinking in real terms. This does prop up demand, but it is not sustainable in the long run. Again, the root of the problem is political: slow wage and income growth, due to excessive corporate power brought about by the evisceration of institutions like labor unions and labor market regulations designed to ensure that workers get their fair share of the growing pie.

by TGeraghty on Wed Mar 29th, 2006 at 04:07:51 AM EST
[ Parent ]
Re: EU unemployment is a problem. (none / 0)
Debt does have that effect, although it is a deeply perverse way to address the problem.
This ties in with rdf's diary credit = growth, to which DeAnander quipped that "credit" is just another word for debt.

Maybe you'd like to comment over there?

By the way, Drew owes me a diary on debt-based money and how it is [not] a perverse vay to run a monetary policy.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Carrie (migeru at eurotrib dot com) on Wed Mar 29th, 2006 at 04:13:29 AM EST
[ Parent ]
Re: EU unemployment is a problem. (4.00 / 2)
Let me backtrack a bit.

I agree with Drew that debt is not necessarily perverse. At reasonable levels it is part of a well-functioning economic system.

What is perverse in the US is the level to which debt is substituting for sustainable growth in living standards from wages and incomes.

It's all a question of balance.

by TGeraghty on Wed Mar 29th, 2006 at 04:30:51 AM EST
[ Parent ]
Re: EU unemployment is a problem. (none / 0)
I mentioned it because I have the perception (perhaps wrong) that the modern right has been in the vanguard of disdain for acting on aggregate demand. ("Supply-siders" spring to mind of course.)

However, in power the Bush admin has acted in a different manner and I suppose I see a danger that they get a bit of it before a lot of the left does.

(This comes out of observing the renewed rise of a "fiscally responsible" left, which I worry has internalised too much of the supply-side nostrums.)

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 06:49:10 AM EST
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Re: EU unemployment is a problem. (none / 0)
The question is whether on not we'll be able to graduate to a Type I civilization.
Carl Sagan pointed out that the energy gaps between Kardashev's three types were so enormous that a finer gradation was needed to make the scheme more useful. A Type 1.1 civilization, for example, would be able to expend a maximum of 1017 watts on communications, a Type 2.3 could utilize 1029 watts, and so on. He estimated that, on this more discriminating scale, the human race would presently qualify as roughly a Type 0.7.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Wed Mar 29th, 2006 at 03:58:40 AM EST
[ Parent ]

EU unemployment is a problem. | 70 comments (70 topical, 0 editorial, 0 hidden)
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