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Greater even than the uneven distribution of wage rates in the Eurozone, is surely the uneven distribution of employment per se. It should be politically much easier for Eurozone political parties to support "equal pay for equal work", than equalised social welfare systems which could only exist by direct subvention of Greek etc, government coffers from German government coffers etc.

If there is one market failure in the Eurozone at the moment, it is surely the labour market failure of jobs failing to migrate to where unemployment is highest and where wage rates are also much lower.  Indeed high unemployment correlates with low wage rates - the reverse of what classical economics would predict. The single market has failed to produce the capital flows and investment patterns from high wage to low wage economies that should have tended to equalise unemployment rates by now.

It should be easier to persuade German Capitalists to invest in low wage economies than to persuade German voters to support Greek "subsidies" at their own expense, or even to support EU wide industrial/agricultural/energy and transport policies which favour net transfers/investments in low employment/wage economies. But in stead of mass capital flows from high cost to low cost economies we have mass people migrations from low employment to high employment economies. Why is it that "people" are showing more "flexibility" and mobility than capital?

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Aug 31st, 2013 at 07:12:56 AM EST

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