Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Want to be like Europe? Think again. Why the American model is still better.

by r------ Tue Jun 20th, 2006 at 03:00:11 PM EST

A defense of Social Democracy and a Criticism of Europe's version(s) of it.* .

You've had the argument before. You're discussing health care, unemployment insurance, childcare, or low-income housing with one of your "moderate" colleagues. You point out the strengths of Europe's social safety net, how most Western European nations have efficient and relatively cost-effective universal, single-payer health care, how you don't necessarily lose your home if you get laid off in the core EU, how homelessness among families is virtually unheard of and where state-sponsored pre-schools promote early childhood development and socialization and make it easier for both parents to fully and equally participate in the workforce.


Your colleague agrees with you that all of these things are wonderful ideas, and agrees that it'd be nice if we had them in the US as well. But then your colleague "reminds" you of "massive" unemployment, stagnating wages and sluggish economies in Europe. "Do you not know that it is precisely because of the cost of  those wonderful social programs you are describing that Europe is slowly becoming a shithole?" your colleague avers. And small wonder, given that this point of view is, in the US, one of the most ubiquitous bits of received wisdom which have entered into public attitudes in the past few decades. (And I'll let you guess from which source this wisdom has generally been received.). Unfortunately, as with much received wisdom, this particular bit is complete bullshit.

Fact is, America does have something to teach Europe to get its moribund economy moving towards more full employment and greater participation in the fruits of sustainable expansion. But it has little to do with slashing the welfare state, and far more to do with greater, not less, income re-distribution. This may seem counter-intuitive, for much of the received wisdom described above decries the so-called socialism of the European welfare state illegitimately robbing the rich to feed the poor (which alas is no longer a phenomenon which captures the popular imagination these days, note to would-be modern Howard Pyles).

But the truth is, much of Europe in fact does precious little of the sort of redistribution which has made US economic growth so relatively robust in recent decades: regional redistribution.

In many ways, the US Federal government acts as an income transfer spigot, taking money from rich states like New York, California, Connecticut, Massachusetts and Minnesota and transferring it to poorer states like Alabama, Mississippi, or the Dakotas. And, while an increasing amount of these transfers are invested in non-productive assets like the bridge to nowhere, the history of this process is an indisputable success: economic re-vitalization of large swathes of heretofore poor parts of the country.  The result? Once the poorest part of the US by a country mile, the South East, and the Rockies and Dakotas have caught up or are catching up, and growing  at a faster pace than the US as a whole.

Contrast this with Europe's pitiful Regional Development fund, the EU's only true mechanism to inter-regional public investment transfers, whose transfers amount to a measly 0.46% of GDP.

It is not because the US has gutted its social welfare system and Europe needs to do the same which explains why the US has grown faster than Europe in the past two decades. It is precisely because the US has done a better job at a macro-economic level than the EU in promoting development in its poorer regions that its growth has outstripped that of the EU. European values only appear to be socialist in contrast to a putatively laissez-faire America. On closer examination, the US is far less Randian than meets the eye, while Europe's socialism is decidedly of the bourgeois type and therefore far less effective than it might be.

As Galbraith, Conceição and Ferreira argue in a studied published in NLR, (subscription only and well worth it) a while back, the Wall Street Urinal's view that labor rigidities and the high cost of the Welfare state hold employment back in Europe is just dead wrong. Instead, they argue, high-income countries in Europe typically have higher rates of employment, while labor rigidities and the size of the welfare state tend to positively correlate to income. The richer, more vibrant parts of Europe tend to have the most elaborate welfare states and the lowest unemployment.

How do they do it?

High-income countries subsidize and support the pay of low-productivity people. They do not rely on markets. They provide high minimum wages, buyers for farm produce, jobs in vast public bureaucracies, free health care and higher education. As a result, low-productivity people stay put in their low-productivity jobs. They do not migrate in large numbers toward the high productivity sectors, in the pursuit of higher pay. The pay in such jobs is not so much higher, all aspects of living accounted for, to make the trouble of earning it worth their while. This is the secret, it appears, of fuller employment in richer countries. This suggests that the real and relevant rigidities of today's Europe are entirely different from those proposed by the conventional view. Indeed, they have nothing to do with supposed inflexibility of relative wages inside any particular country. On the contrary, increasing relative wage differentials would only cause even more low-roductivity people to abandon their present employments in favour of the job queue and the dole.

What snags the EU in moribund levels of economic growth? Why, the same rigid neo-liberal orthodoxy which encourages us to do away with minimum wages, increase worker "flexibility" (neo-liberal code for reducing living standards) and gut the welfare state:

The relevant rigidities are to be found in the thinking of Europe's central authorities on two  levels. First, these authorities are unable, or unwilling, to foster the development of macro-economic policies that  can effectively build Europe's peripheral economies through national programmes of full employment--and that, indeed, once did so in the heyday of national Keynesianism from 1945 to 1970. Second, they have been unwilling to make the vast income transfers, across national lines, that would be required to make rural or servicesector

or even civil-service life in Spain as attractive as it is in Sweden.

(And which the US continues, after a fashion, to pursue, if not as efficiently as it might).

In fact, present European policy is designed to work in just the opposite direction. Through monetary union and the Maastricht treaty, Europe has moved to restrict the autonomy of both monetary and fiscal policies and to impede the achievement of full employment on the national scale. Meanwhile, barriers to migration and resettlement obstruct the citizens of the European periphery from taking full advantage of the more generous social welfare systems to their north.

And, it should be noted, EU enlargement made sure these rigidities were accentuated for the new member states.

This concentrates unemployment in Spain, Italy and Greece and reduces the pressure on Northern Europe to pursue full employment policies. And, of course, European fiscal policy places relentless pressure on individual countries to cut back on their welfare states.

In sum, there are good reasons why lower incomes and more inequality should mean more unemployment--and why, therefore, present European policy is a formula for continued failure to reduce Unemployment. There is, undoubtedly, a long-term, structural aspect to the European unemployment problem. It does not consist, as characteristically in America, of short-term involuntary displacement-- a phenomenon that places unemployment in the causal drivers' seat. In European conditions, rather, inter-regional inequalities cause unemployment. The latter is, indeed, in part a `voluntary' response to an unfavourable set of choices facing low-income people in the low-income countries. Better the dole and the grimy suburb than life in the village or on the farm. But structural conditions are policy driven; these inequalities are, also, created.

It isn't because Europe is too "social" that it's growth lags. It is because it is not social enough, and the US is. And the US' brand of social spending and  wealth transfers promotes the sort of regional flexibility that the EU, for political reasons, has attempted to quash.

As for the United States, it is true that the 1970s and the early 1980s were a time of sharply rising wage inequalities by national-historical standards. But one must recall that, as late as 1970, the US was viewed, and had been for a century, as the pre-eminent country of the middle class. While lacking European socialist traditions, America also lacked European fascist traditions. And it did experience a vast expansion of the role of government during the New Deal and Great ociety, as well as a sharp reduction in wage and earnings inequalities during World War ii. Again, contrary to much received belief, and in contrast to Europe, American policies have remained open to the joint reduction of inequality and unemployment. Measures of earnings dispersion for manufacturing show a steady decline after 1994, alongside the reduction of unemployment to rates just above 4 per cent.

Note: this study was published in 1999; some reversal of this trend has no-doubt occurred.

...the true American advantage is not inequality, which by our measures is lower than that across the whole of Europe, but America's national policy means for income redistribution and the pursuit of full employment, and perhaps the pressure for full employment brought to bear by a mobile population on the richer regions. Indeed, one can argue that, compared to Europe, the United States may be the true social democracy today, a social democracy founded on liberal access to credit, on a national social security system, and, since 1994, on a rapidly expanding Earned Income Tax Credit that has bolstered the real earnings of lower-income Americans and may therefore have played a critical role in lowering unemployment. Americans take the low-wage jobs because the gaps are not in fact that high, and because the after-tax gaps are even lower--particularly when one considers that Americans pay a federal progressive income tax and not the regressive European vat.

We are not, by any stretch of the imagination and despite the depradations of the past half decade, behind the Europeans in being social and efficient. Despite the advertised libertarian values of the wealthy class of Americans, our values are arguably more demonstrably egalitarian and social than those of the EU. And it is precisely because of this egalitarianism and our unspoken and unavowed socialism that we are stronger than Europe in most measures. Sure the US doesn't have an efficient and government run health-care delivery system, adequate worker protections, early childcare education or enough low-income housing. But this is nothing that a decade of solid Democratic control of Washington can't solve: look what we did with the Great Society.

On the other hand, policy elites in Europe enforce a brand of market fundamentalism which has now condemned not one but two generations of its citizens to a precarious situation of alternate periods of unemployment and low-wage temporary employment. It is just this fundamentalism which brought students into the streets in France not so long ago, and which brought me to the US ten years ago.

In conclusion, maybe it's time to admit that the EU isn't all lefties in America think it's cracked up to be. Maybe you friend had it half right. Europe's economies are by and large lagging their potential. And unemployment is far too high, especially for young people. But the reason for this isn't because Europe has too much socialism. It's because it doesn't have enough. The wingnuts are right about Europe. They're just wrong about the reasons why.

How could this be? Maybe because helping one's fellow man and increasing the common wealth isn't just the right thing to do. It's also an excellent investment.

Display:
 The income-distribution figures, those should be interesting to see.

 What do they show?

  As I hear it, the income distribution and the net-worth of Americans have seriously worsened in the years since Bush took office.

 Until someone comes up with that comparative data we should all read, Wealth and Democracy: A Political History of the American Rich (2002) by Kevin Phillips.

Meanwhile, there's this report from the Minneapolis Fed, (data from 1992, published in Spring of 1997. I doubt things have greatly improved in income, earnings and wealth distribution--but I'd be delighted to be proven wrong on that.)

 "Dimensions of Inequality: Facts on the U.S. Distributions of Earnings, Income and Wealth"

 Page three is particularly interesting--the section "Earnings, Income and Wealth", as is the data in chart # 1.

 

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Tue Jun 20th, 2006 at 03:26:49 PM EST
This being said, Galbraith et al are comparing this to the same measure in the EU-15 (this study was pre-enlargement) as a whole.

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Tue Jun 20th, 2006 at 04:08:08 PM EST
[ Parent ]
Thanks for posting this over here.

Some more comments in the open thread.


Those who can make you believe absurdities can make you commit atrocities. -Voltaire

by p------- on Tue Jun 20th, 2006 at 03:28:43 PM EST
I won't comment on the democratic deficit that led slowly to the Europe we now have, some bits on A Fistful of Euros.

One thing I'm thinking is that Europe once did some big money transfers (portugal, spain, ...) as a solution to the wealth and infrastructure gap.

But now it appears to be neoliberal full speed, poor entrants don't get subsidies but instead do low pay dumping and tax evasion.

In short we exchanged solidarity through taxation and repartition to ... full scale economic war between european countries.

No data to back that up, so might just be a wrong impression :)

by Laurent GUERBY on Tue Jun 20th, 2006 at 04:08:58 PM EST
re: regional redistribution. The big difference is that the vast majority of taxation and spending is done on a national rather than European level. So in Europe your income taxes go to your government which sets your benefit levels. In America most income taxes are collected  by the federal government, so if an area has more income it pays more. Same goes for spending on big ticket items like Medicare or Social Security or defense.  That makes transfer payments pretty much automatic in the same way that rich areas in a given country transfer money to the poor ones through entitlement programs. The two big areas where funding is primarily on the local and state level - policing and education - you have huge differences in spending. To a certain extent that's also true of Medicaid where the federal government provides matching funds.

The biggest transfer payments from a rich area to a poor one in Europe in recent years have been in post unification Germany where a poor region suddenly became part of a wealthy country and the dynamic applied.  

So I think that while interesting this study really amounts to saying that the EU does not function anything like a single country.  There is no politically feasible way for it to do so since for the rich countries it would mean consciously agreeing to much higher taxation in return for less spending.

by MarekNYC on Tue Jun 20th, 2006 at 04:22:06 PM EST
There are levers other than fiscal that can smooth the transition in terms of integration and cohesion. Unfortunately, when you've agreed to an abomination like the "Growth and Stability Pact," you've pretty much thrown away whatever flexibility you might have had.

It wasn't just higher taxes which financed re-unification either - the FDR issued a massive series of public debt offerings as well, arguably at levels which drove interest rates up in all of Europe and thereby spread the pain of enlargement to the rest of the EU.

Financially the EU largely functions as a single entity. The fact that it does not at a fiscal and socio-economic level simply (but very significantly) exacerbates the pain that Francfort's neo-liberal monetary policy dishes out to working people and jobless alike, imho.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 04:37:29 PM EST
[ Parent ]
Why is the Growth and Stability Pact an abomination?

Because it says that you should not spend more than you have, with some flexibility (3% of GDP, not so little)? What's wrong with that? It's wrong only if you consider taxes bad. You can always pay for more by taxing more, can't you? Borrowing money is just passing the buck to someone else - in the case of a monetary union, to your neighbors, who share their currency with you.

The GSP is responsible. Something we seem to have lost in today's politics.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 05:13:44 PM EST
[ Parent ]
I don't consider taxes bad.

I do on the other hand think some serious flexibility is in order to integrate the new 10. Look at the mess integrated just the DDR caused. A mix of taxation and debt offerings to be paid by increased future growth would seem to me to be reasonable.  

And as you know that inflation is just another tax, and a looser monetary policy promotes inflation, which we are about to see in the US imho in a big way but which we see far too little of, imho, in Europe.

This being said, inflation is a less regressive tax than those favored in, say, France (payroll taxes and the tva).

OTOH, 3% is hardly flexible. If you want to restructure and invest in the newly entered countries, you're going to have to do better than that. And do so at an EU-wide level and not just a natioanal level. Further, the ECB has controlling inflation as its only primary charge. At least the US fed tips its hat to the importance of battling unemeployment as well.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 06:13:08 PM EST
[ Parent ]
The DDR is a mess because politicians (Kohl) did not listen to the Bundesbank and went for the 1-for-1 conversion of the Ostmark into DM, which wiped out the entire economy of the DDR in one day, created inflation which the Bundesbank then had to fight (at a high cost across Europe), and created lingering resentment between the 2 Germanies that lasts to this day.

the accession countries need to be helped, but it's been shown (and that's a EYU rule) that help should be no more thna 4% of their GDP. That could be achieved with a slightly larger EU budget, and no need to break national limits.

Still, the Masstricht criteria are only a problem if you don't try to get your spending under control. Most of the smaller countries managed it - and the big countries managed it before the euro when their entry in it was at stake...

3% of GDP is still a pretty big number.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 06:44:44 PM EST
[ Parent ]
more consistently the advice of German central bankers, not to say Duisenberg or Trichet have been any better.

Kohl may have gotten this particular policy wrong (though for understandable reasons) but the general instinct was sound.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 10:35:23 PM EST
[ Parent ]
Here's a recent article that argues you can have expansionary fiscal policy that is also responsible

Challenge: How State Policies Can Raise Economic Growth

Neither neoliberal policies nor policies entailing a rising budget deficit-to-GDP ratio will be successful in increasing long-run growth, writes this author. What is needed are higher taxes, which would allow the government spending share to rise, and more public investment. The author calls this approach supply-side activism.
by TGeraghty on Tue Jun 20th, 2006 at 06:16:12 PM EST
[ Parent ]
I agree, but didn't Germany, France and Britain break the 3% rule?

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Jun 20th, 2006 at 06:27:37 PM EST
[ Parent ]
yes, not the best day for the EU.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 06:45:41 PM EST
[ Parent ]
Don't get me wrong, because, as I said, I think it's a good rule.  It's more a problem when France and Germany break it, since Britain is still using sterling.  But, still, all three should take it seriously.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Jun 20th, 2006 at 06:51:30 PM EST
[ Parent ]
The funny part is that Gernamy and the Netherlands especially attacked the poorer would-be Euro countries viciously on "creative accounting" in the lead-up to the Euro, but then nobody dares call fould when they flout the very rules they used to convince Germans to give up the DM.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 09:55:18 AM EST
[ Parent ]
Oh, I know.  As always, if he/she/it exists, God certainly has a sense of humor.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 02:10:19 PM EST
[ Parent ]
 Yes, they violated this rule and its instructive that they did.  In violating it, they were showing some all-too-rare respect for the reality of people's lives and daily hardships.  

The so-called "stability pact" is one of my favorite examples of Euro-Idiocy à la Américaine.  This rule pretends that politicians can live in defiance of reality, setting targets and imposing them like straight-jackets on whole populations.

 To understand what the rule is like, Drew, all you have to do is recall Hoover, in the face of the Great Depression, pinning his vain hopes on a broken economy to fix itself all by itself.  Why?  Because that's what the accepted theory of the day told him ought to occur.  

  Franklin Rooselvelt, to his credit, understood that masses of unemployed and hungry people could not eat, nor clothe themselves, nor find shelter from debts and from nature's elements in the "accepted theory of the day" so he chucked it and applied Keynes' views.

 These lessons are lost on European Union Technocrats who worship anew at the shrine of Neo-liberalism.

 All that's missing in the picture is a new world-wide Great Depression.  Patience please.  They're arranging that!

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 09:48:47 AM EST
[ Parent ]
I couldn't have said this better myself.

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Wed Jun 21st, 2006 at 10:07:56 AM EST
[ Parent ]
Really?  Because, in many ways, it was absolutely incorrect.  For one thing, Hoover was not expecting a broken economy to heal itself.  He had no choice in the matter, because the Fed was, at the time, strictly following the Gold Standard.  At the time, that led to higher interest rates, because dollar holders wanted to exchange their cash for gold, and the Fed had to continue raising rates when it should have been lowering them.  The same thing happened to the Bank of England.  This was not a Hoover-made problem.

Not that Hoover doesn't deserve some of the blame.  He was an idiot, as we both know.  But Milton Friedman was absolutely right, in my opinion, to point to the money supply in Monetary History.  Deficit spending would've simply served as a way of forcing the Fed to lower rates, which is what FDR did in addition to ending the Gold Standard in '33.  The problem was that very few people on the planet understood the theory behind the solution that Keynes proposed.  And, unfortunately, little has changed on that front.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 01:25:15 PM EST
[ Parent ]
 "For one thing, Hoover was not expecting a broken economy to heal itself.  He had no choice in the matter, because the Fed was, at the time, strictly following the Gold Standard.  At the time, that led to higher interest rates, because dollar holders wanted to exchange their cash for gold, and the Fed had to continue raising rates when it should have been lowering them.  The same thing happened to the Bank of England.  This was not a Hoover-made problem."


"Not that Hoover doesn't deserve some of the blame.  He was an idiot, as we both know.  But Milton Friedman was absolutely right, in my opinion, to point to the money supply in Monetary History.  Deficit spending would've simply served as a way of forcing the Fed to lower rates, which is what FDR did in addition to ending the Gold Standard in '33.  The problem was that very few people on the planet understood the theory behind the solution that Keynes proposed.  And, unfortunately, little has changed on that front. "

  Roosevelt's "ending the Gold Standard in '33,"-- why didn't Hoover do this himself?

 Same question for

 "Deficit spending would've simply served as a way of forcing the Fed to lower rates, which is what FDR did ..."

  why didn't Hoover do this himself?

 In short, whatever Roosevelt's remedies, why didn't Hoover adopt them himself?  It seems to me that if Hoover "had no choice", then neither should Roosevelt have had.  I could be wrong, of course, but I thought that I'd read in portions of "The Great Crash" that Hoover did expect the economy to "right itself"--or, indeed, this is simply another way of saying what you're pointing out: Hoover's understanding had it that whatever he might "do" as a corrective measure could only lead to something then considered "worse"--for example, your mention of the concern for "higher interest rates, because dollar holders wanted to exchange their cash for gold, and the Fed had to continue raising rates when it should have been lowering them".

 That's what I meant by saying that Hoover's believed that the economy could and, to be perhaps more precise, had to, "fix itself" because his interventions should have made things--from the economists' point of view--worse.

 It's just that sort of thinking which Roosevelt sacrificed to a clearer view of reality, rather than clinging firmly to established faiths in economic theories.  Am I wrong in that?

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 01:46:30 PM EST
[ Parent ]
You seem to be under the impression that Roosevelt's view was somehow seen as "clearer" at the time, which it was not.  Keynes and his colleagues at Cambridge had to fight, constantly, to push these ideas.  Roosevelt, himself, was unable to spend on the level required until the onset of the war.  Stop pretending as though Roosevelt rode in on some sort of white horse to save the country.  This was a battle that was decades in the making.  It is one that, on some issues, continues today between Keynesians and Neoclassicalists.  It wasn't a matter of Roosevelt waving a magic wand to eliminate the current Fed mandate and run up enormous deficits.  The budget deficit, if I remember correctly, never even reached 4% of GDP prior to the war buildup, because few were willing to allow the government to borrow enormous amounts.

This view you provide is a little like describing WWII as, "Well, all we had to do is kill that Hitler guy."  There was a little more to both.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 02:06:45 PM EST
[ Parent ]
 "You seem to be under the impression that Roosevelt's view was somehow seen as "clearer" at the time, which it was not."

  If I think of it as clearer, it's in relation to Hoover's.  As it seemed to me that it was Roosevelt, rather than Hoover who changed government policy to one of actively intervening where and when Hoover did not.

  What about those questions I posed?

 Whatever Roosevelt did to improve the situation--did he do anything to improve it, in your view?-- why didn't Hoover do these things in the first place?  I'm still trying to find your answer to that question.

 Granted that the House Committees on Budget and Appropriations were the tax and spend authorities; still, when you say that "Roosevelt, himself, was unable to spend on the level required until the onset of the war", I'm left wondering whether that fact explains something about where and about why Hoover's policies were different than Roosevelt's and what difference it makes to the fact that they were different--if they were.  Are you defending a view that between Hoover's policies and Roosevelt's there's little to distinguish them and that what there is, is largely due to circumstances (the war) which were not of FDR's making?

 As fuzzy and false as my view may be, my points here are resting on the belief that Roosevelt did things in an effort to relieve the Depression's hardships and to counter the economic factors which underlay it--things which were in the power of Hoover to do but, unlike FDR, Hoover did not do, for whatever reason.

 Where, I ask, am I wrong about this?  I grant you that I don't know what color FDR's horse was or whether or not he had or used a wand of any kind.  But in history class, I was filled with nonsense about his having taken turns away from Hooverian economic policies which were intended to relieve the Depressions symptoms and causes-- and did so.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 02:29:07 PM EST
[ Parent ]
If I think of it as clearer, it's in relation to Hoover's.  As it seemed to me that it was Roosevelt, rather than Hoover who changed government policy to one of actively intervening where and when Hoover did not.

It was -- yes -- Roosevelt who began the era of active government intervention in the economy.  But it's only clear to us, today, that this was the correct direction at the time.  In 1932, many did not recognize the positive role governments could play in economic affairs, including Roosevelt himself.  Read Roosevelt's platform.  He ran on a platform of "Stop the Deficits!"  And, yes, that is an exact quote from one of his campaign slogans.  Roosevelt ran on what we would consider a somewhat libertarian platform today.  He called for "immediate and drastic reductions of all public expenditures," not high deficits and worker programs.

Whatever Roosevelt did to improve the situation--did he do anything to improve it, in your view?-- why didn't Hoover do these things in the first place?  I'm still trying to find your answer to that question.

On the whole, yes, I think Roosevelt did things to improve the situation.  I answered your questions by pointing out that (1) Hoover would have faced an opposition that could not, at that point, have been defeated, that (2) the reason for (1) is that, at the time, people thought about economics in a completely different way at the time.

You have to look at that period in context.  The economy looked completely different to people in 1932.  There was a great deal of opposition to Keynes's theory.  F.A. Hayek, who won the Nobel Prize in the 1970s, was one of the big guns in the field fighting the deficit idea.  Others supported deficit spending.  Milton Friedman -- to, I'm sure, the shock of the far-Left -- was a big supporter of the idea at Chicago and even helped to convince Congress of its merit.

This was a war in economics, not unlike the war waged by Adam Smith and David Ricardo against mercantilism.  It was a process of tearing down decades of conventional wisdom.  People, at the time, believed in what economists call "The Moral Economy," whereby recessions reflect the purging of the excesses of the expansion.  Thus, the Great Depression was seen as a punishment for the 1920s boom.  They also believed that the Gold Standard was a natural governor of solid monetary policy, that prices and wages were perfectly flexible, that involuntary unemployment was impossible, and so on.  Today, very few believe in these ideas.

There was plenty to distinguish FDR from Hoover.  I didn't deny this.  But I think you're buying into many myths about Roosevelt that have been pushed over the years.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 03:41:30 PM EST
[ Parent ]
Just a minor aside.

It's true that many didn't think government intervention was a good thing, but these many were the wealthy for whom the US government was run for most of the history of the Republic until that time. And this would be true of FDR, who as you must know came from money quite old for American standards of the time.

But there were a fair amount of folks who thought otherwise. Eugene Debs comes to mind. These folks had their counterparts in Europe, many of whom came to power in the '30's, Blum's Front Populaire coming to mind. This was a time when the term "socialism" still meant something.

Perhaps if FDR had had a clearer idea of what socialism and democracy should look like when he came to power, he would have taken things farther when he had the chance. To his credit, he knew something had to be done, unlike the Hoover administration and, to a lesser extent, defenders of the status quo in the EU today. But a man like Debs would have come out of the shoot much faster and more emphatically, no doubt about that.

In sum, Capital didn't know what to do in 1932. Labor and the people certainly had different ideas.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 03:55:46 PM EST
[ Parent ]
It's only a staightjacket if you're burning money like at a casino.

we complain about US bubbles and deficits, when in fact they are not much different, expressed in the numbers used for the Maastricht criteria, from Europe's numbers.

Debt and inflation are NOT good things, especially when used to sustain consumption, and it wil lalways be the poor that pay the price in the end.

3% of GDP (that's something like 7% of public spending, i.e. usually 15-20% of government spending) is a lot of leeway and flexibility.

The only reason it felt like a constraint in some countries is because they never made an effort during good times to reduce their deficits (in France blame Chirac and his vicious jab at the "cagnotte"), so they had no leeway in bad times. That's just bad management.

Do you really expect to be able to run your expenses at 20% than your income year after year and not see your bank getting involved in how you manage your money?

This is the height of irresponsibility.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 10:16:58 AM EST
[ Parent ]
US current fiscal posture is indeed irresponsible, but this is not because of the level of the deficit 3 years ago, it is because of the peristance of it in period of growth, and also the structure of that deficit. Not to mention an unsustainable CA deficit  which is slowly becoming untenable as everyone but the central banks of major trading partners moves their money elsewhere.

OTOH, that 3% to GDP deficit spending is sufficient in the face of a persistent and severe slowdown for large swathes of the EU and its more vulnerable citizens (the young, the unskilled, and the poor) is not a serious proposition, especially when the ECB has proven signally unwilling to provide stimulative measures on its side. The US, for instance, has been known to run deficits as high as double that, and that's just the federal deficit, as states also float debt offerings in times of economic slowdowns (staying within their constitutional duty to balance budgets by earmarking future receipts due to growth to pay the coupons off).

Unsurprisingly, the jobs growth story in America is a little different than the European one.

Deficits in and of themselves are not bad things. It's what you do with the proceeds of the debt you take on which determines the utility of the debt.
Clearly, the US fiscal situation today is laughable, but this is not least because the spending priorities are almost completely upside-down, not to mention the rreceipts side of the ledge.

But the EU situation is stagnant, and has been for now two decades. The proof that 3% is insufficient and that ECB monetary policy has been tight is the fact that the the economy is not creating a sufficient number of jobs and hasn't for 15 years or so. The situation can be imporved by conventional methods, or it can be changed by unconventional methods. Those student demonstrators are pointing to the unconventional methods. But the EU technocrats are simply pointing to a discredited statu quo. Why? Because it's hard for a public servant to admit one's been doing a poor job.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 10:38:57 AM EST
[ Parent ]

the jobs growth story in America is a little different than the European one.

Yep. It's worse.

See the Economist:

See the OECD: private sector job growth, 1996-2002



In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 11:11:35 AM EST
[ Parent ]
I'm not sure how you get "worse" out of those charts.

I get "far better" out of the 1986-1995 timeframe, and "same" out of the 1996-2005 time frame.

In any event, the rate of employment growth in the EU is not sufficient enough to increase labor participation, put upward pressure on wages, increase labor mobility and all the other things which promote greater participation in the fruits of expansion.

What the Economist chart tells me is what I already knew:  in terms of jobs, the EU went backwards quickly for a decade and been stuck there ever since. The US grew robustly for a decade but now is mired in the same jobs swamp as the EU. In both cases, the technocrats extol the virtues of their success, and in both cases, the public is in a sour mood and is living quite a different reality.

One other difference: in Europe, the "technocrats" have been feeding the same line for 20 years, whereas the line is somewhat fresher in the US, with the stagnation now only 5 years old.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 11:46:57 AM EST
[ Parent ]
because US population grew a lot more than European population during both periods.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 01:10:55 PM EST
[ Parent ]
I don't see that in BLS statistics. I see a 1.5% compound annual growth rate of the US formal labor force from 1984-1994, and a 1.2% growth rate for 1994-2004.

On the EU side, I'd be curious to see the statistics but I suspect that they're not that much lower, if at all.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 01:20:23 PM EST
[ Parent ]
Jerome, I think the more likely explanation for your first graph is that the US began the '96-'05 period with a lower unemployment rate and less spare capacity.  American unemployment fell all the way down to 3.8% from a high of about twice that under Bush I -- at which point, of course, wage growth shot up like a rocket, leading me to believe that it was not a matter of playing games with the stats.  Combine that with the fact that an American recession arrived right in the middle of that period, and it's not unreasonable to expect the US to have lower employment growth during it.  It does not say, with certainty, that European economies have performed "better" than the American one.  It suggests that they had more spare capacity, and perhaps began riding the tech wave slightly later.  The Standardised Unemployment Rates -- what does that mean? -- still suggest a better picture in the US.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 01:36:46 PM EST
[ Parent ]
There are a lot of perfectly reasonable explanations, and a lot of easy ways to show statistics more favorable to one country or another (the easiest method: change the dates, as the US and Europe have had their recessions with 1-2 year difference; the trickiest one: alternate between absolute growth and growth per capita).

My point was simply about the supposedly wildly inferior performance of the European economies, a myth that redstar seems bent on perpetuating.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 04:30:17 PM EST
[ Parent ]
Everything in moderation, sir.  I don't recall describing EU economic performance as "wildly inferior". I think my characterization of it would be "consistently but moderately underperforming relative to its potential and underlying tfp due to overtight monetary policy, ineffective integration of fiscal and social spending policies stingy application of timely stimulating measure".

Not doing bad, considering.

But if you happen to be young and jobless in many parts of Europe, this is not acceptable. Unemployment in Europe and in France at the levels it's been since the late 1980's is unacceptable. And imho due to the consistent, two-decade-long underperformance described above.

Not wildly underperforming, only slightly underperforming though systemically so. Small comfort to hte jobless in St. Ouen.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 04:56:19 PM EST
[ Parent ]
By the way, I have to ask: Why is 9.5% unemployment in France unacceptable while 11.5% in Germany is not worthy of mention?

I don't know about "wildly," but you do imply that Europe's performance has been inferior to America's when your title reads, "Want to be like Europe?  Think again.  Why the American model is still better."

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 06:25:39 PM EST
[ Parent ]
I have waid but nobody took notice that Spain had 20%+ unemployment in the 1980's, as well as high inflation.

"Europe" has progressed even if Germany, France or the Netherlands, where Spaniards and Italiands used to emigrate with a cardboard suitcase in the 1960's, are not doing as well as they used to before the oil shocks.

I don't have a problem with 10% unemployment. I do have a problem with ageism, long-term unemployment, people being denied jobs because they are "overqualified", and so on.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 06:35:07 PM EST
[ Parent ]
I'd be curious to hear your take on how Spain went from low 20's to 8% in a decade.

I too have no problem with 10% unemployment provided that this rate of employment is managed well and does not require that a whole segment of the population be excluded in a significant way from a dignified participation in citenship.

This is unfortunately not the case when unemployment is 10% in France. And perhaps Nietzsche is correct in his assessment of the phenomena in this regard.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 07:21:57 PM EST
[ Parent ]
I have no idea. Must have something to do with EU membership, and 14 years of socialist government. On the other hand, Felipe Gonzalez won his lanslide victory in 1982 with a promise to "create 800,000 new jobs", on which he didn't really deliver.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 07:42:20 PM EST
[ Parent ]
I did mention Germany and actually if you want to know, my step-brother is living up there. And guess what? He's unemployed.

The title was voluntarily provocative, this is true, and to be honest it was written for an American audience (dailykos). But the idea was to frame the issue as one which explains the common American conceptions of European performance versus the US in a left frame, which quite frankly is something which isn't done but needs to be. If you live in America and work in finance as I do, you are quite acquainted with the criticisms of Europe's social system and the lagging economic performance it has seen in recent times. And as it happens, some of those latter criticisms are to an extent accurate and to be honest, something I myself live through, though as I think I try to frame things, not for the reasons an American neo-liberal would suggest.

I must confess to some puzzlement in the fact that I am citing an economic study, critical of EU economic policy (as if that is really controversial!) out of the pre-eminent neo-Marxist english language journal, and am being taken as a reactionary apologist for American neo-liberalism. The ironies are bending over themselves in knots, I think.  

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 07:17:51 PM EST
[ Parent ]
I'm an observer here; I never mingle in these debates because you're all over my head. But:

I must confess to some puzzlement in the fact that I am citing an economic study, critical of EU economic policy (as if that is really controversial!) out of the pre-eminent neo-Marxist english language journal

is an example of the problem the ET community has been fighting from the very start. The problem is exactly that "critical" studies on EU economic policy are no longer controversial. They've become the standard - and as I see it there's a lot of rubbish floating about - and they are indeed perceived as a strategy by fervent neo-liberals to demand drastic reforms to break down the social model.

I think you parry excellent in this debate, and that you do so already for over 24 hours and keep the debate alive is truly something I want to applaud you for - but I also get a misgiving that people here are quite anxious that some of the neo-liberal mud flinging at Europe is starting to stick even at the more sensible people in finances. Personally, I'm not qualified enough to give my opinion of what's myth and what's not; I only know that when it comes to toying with numbres, statistics and definitions I try to stay far away. I'd urge you to carry on; the discussion is pretty sharp, but you're not the bogeyman in this debate.

by Nomad on Wed Jun 21st, 2006 at 08:31:10 PM EST
[ Parent ]
Frankly, I have no idea why you believed otherwise, but I didn't take you to be a neoliberal.  And, while I must confess to being unsure, I don't think Jerome believed you were either.  I didn't even know Marxists -- what the hell is a neo-Marxist? -- were allowed to publish, but I suppose there is a journal for everybody, even sociologists, these days.  Anyway, with that in mind, I don't see the ironies, nor do I know how one would go about bending over into one knot, let alone a series of them.

The name "redstar" doesn't exactly scream "neoliberal" to me, either.

Speaking of sociologists, stop worrying about frames, and start worrying about facts.  Adding one and one yields two, after all, so why not focus on the evidence instead of cheap word games?  Honest to God, I don't know why the far-Left and the far-Right are so obsessed with the ways in which issues are framed, but I find it simply shallow and further proof that the two sides are more alike than they'd like to believe.  The concern over framing is a major cause of the deterioration in the quality of political discussion in America.

Pay attention to productivity, the state of the budget, growth, unemployment, etc., but keep in mind, as Colman and Jerome have mentioned often in the past, that some of these measures are not calculated in the same way across countries.  If you truly want an accurate picture -- instead of, you know, glorifying the fact that the Red States steal from the Blue States when Congress hands out cash (call them "subsidies" and "tariffs," but, at the end of the day, it's nothing more than the Mafia in shitty suits) -- then dig through the numbers and the methodology.

And guess what? He's unemployed.

This, therefore, demonstrates...what?

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Thu Jun 22nd, 2006 at 12:34:53 AM EST
[ Parent ]

 Honest to God, I don't know why the far-Left and the far-Right are so obsessed with the ways in which issues are framed, but I find it simply shallow and further proof that the two sides are more alike than they'd like to believe.  The concern over framing is a major cause of the deterioration in the quality of political discussion in America.

 It's now a craze.  Probably through repetition, people are buying into the idea that the Republicans have been beating the hell out of Democrats because the former are so expert at "framing the issues" so that these are simple, sound-bites of propaganda which completely bamboozle the American public, helpless before such word-wizardry.

 The theory has it that if only the Democrats could find the knack of devising these catchy slogans, they, too, could frame the issues, repel the Republicans' charms and break the spell in which,  supposedly, the pitiful, hopelessly stupid, American is held by those damned-clever Republicans.

 In other words, taking the trouble to explain things won't and can't work for some all-too-significant number of Americans.  They can only be reached by appeals which have the key slogan which encapsulates and crystalizes the otherwise complicated issues for them.  Thus, "reason" is now claimed to be the Democrats' Achille's-heel; they're too damned steeped in their belief that you really can reason with people, show them through careful argument--the sort which Democrats themselves are susceptible to, or used to be--what the issues are about, why one case is better than another, what the stakes are, what the risks are, and why Americans are being duped by the wily Republicans.   All of that is a waste of precious time and money according to the "framing" theory.  You do better with little sloganeering texts or even no text at all--just evocative sounds and images--the ultimate ideal in message-craft.

 Expect more wars, I say.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Thu Jun 22nd, 2006 at 11:51:24 AM EST
[ Parent ]
It's now a craze.  Probably through repetition, people are buying into the idea that the Republicans have been beating the hell out of Democrats because the former are so expert at "framing the issues" so that these are simple, sound-bites of propaganda which completely bamboozle the American public, helpless before such word-wizardry.
So, what do you think is the matter with Kansas?

It's not about catchy slogans, it's about an insight from cognitive linguistics that our thinking is not primarily logical but metaphorical. If a discussion is not framed in the right conceptual-metaphorical settings, certain things become unspeakable and certain arguments become strained. [I think what I call conceptual metaphors, kcurie calls myths: he likes anthropology and I like cognitive science, but I digress... or maybe not, we're talking about the same issues from different frames]

The problem is twofold. First of all, George Lakoff, having a hammer, sees everything as nails. It's all about framing, he says. Well, I don't think he says that, but rather "guys, look here, you're overlooking the framing". The second problem is that the Democrats don't know what they stand for, or how to win an election any longer, and are desperate for a miracle cure. So they're all too eager to say "aha, its all about framing".

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 Migeru (migeru at eurotrib dot com) on Thu Jun 22nd, 2006 at 12:25:25 PM EST
[ Parent ]
 Your reply is great and very interesting. I'd like to pursue this topic since you know more about it than I do--and if you aren't too bored, you could explain some things to me.

"It's not about catchy slogans,..."

But in everything I see from the Dems, their lead-in to this framing always involves the use of, the search for, the essential importance of slogans--always!

"... it's about an insight from cognitive linguistics that our thinking is not primarily logical but metaphorical."

Okay, that's very interesting; It sounds as though there is some implied conflict between these-- true, in your view?

 "If a discussion is not framed in the right conceptual-metaphorical settings, certain things become unspeakable and certain arguments become strained."

  Aren't these "right conceptual-metaphorical settings" also or very often the very elements of what is in dispute, at issue, in question--i.e. disagreed over?

 In other words, why is it that the elements in dispute are or can be essentially different from the core issues of what is under discussion?  Does that question make sense to you?

To take a practical example, there is now hot debate over the need to "frame" the matter of whether to call the conflict in Iraq a "war" (the current standard reference--and) the one supposedly serving Republicans' interests, or, on the other hand, an "occupation", supposedly framing the matter in a way which favors withdrawal--the end sought by the war's or the occupation's opponents.

 The argument is that by acceding to the terms of the Republicans in the use of "war" to describe the conflict, the advantages of, the need for, withdrawal is clouded and thinking about it is precluded.

 Why?  Why is one fashion "logical" and the other "conceptual-metaphorical"?

Why doesn't either term--war or occupation--operate as easily as a logical or a conceptual-metaphorical element? Indeed, why aren't "conceptual-metaphorical" elements of language integral parts of logical mental operations?  

Why draw a distinction there?

Also, why--or how--is it that the same person who cannot recognize something conceptually important when it is "framed" in the terms of a "war" can recognize this when the term "occupation" is substituted for "war"?  Does that seeming anomaly describe your thinking habits?  If not, why should it fairly describe your ideological opponent's?

In other words, the issue seems to me to imply some reasoning deficiencies which occur in one camp but not the other on any given controversy; and that these deficiencies are linked in some important way to what are claimed to be "conceptual framing" terms.  But, why should one definable set of disputants consistently see one thing rather than another while another definable set consistently sees its opposite in the same controversy?

 This goes against my intuitive notions about people and their behavior.  My view has it that in each camp there are essentially the same facts "seen"--no matter the terms in which they are "framed", and that in each "camp", we have people who accept or reject each of the contending opinions--for reasons that are beyond mere "conceptual framing".  That means that they'd behave and think in the same manner whether the framing terms were altered or not.

In looking at things this way, both parties to the dispute are assumed to reason and to behave in what are fairly called "logical" or "rational" manners.  Though they can arrive at opposing conclusions on the same set of agreed facts.  And, further, "conceptual framing" terms do not appreciably change this dynamic nor can they be reliably predicted to have one outcome or another in advance of practical trial and error.

That is, there is no telling necessarily, whether the term "occupation" shall make current "war" supporters more or less inclined to favor earlier withdrawal, as I see it.  It could as well be one way as the other, or, indeed, I assume that there would be some cases of each, and these in unpredictable numbers either way.

Uesd in the context of political debate, I think "framing" is a very weak and highly unpredictable tool for manipulating people's thinking and behavior.

 It's true in part that Republicans have had some marked success in getting large parts of the public to accept their political assumptions and priorities; but not, as I see it, because of some superior art in conceptual framing.

More likely because they have led people to accept the bases of their reasoned propositions--not merely the terms in which these are framed, since, even when Democrats shout out other alternative "conceptual-framing terms" --or, in ordinary parlance, this is known as "disagreeing with one's opponent", the Republicans stubbornly remain fixed on their existing "frames" of rhetorical reference.

 Why?


"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Thu Jun 22nd, 2006 at 01:50:59 PM EST
[ Parent ]
It's not boredom, it's time availability.

I'll get back to this in its full glory, but let me just say this: war vs. occupation doesn't seem to me indicative of what "framing" and "conceptual metaphors" are all about. Take this other soundbite: when Bush talks about "taking the training wheels off Iraq", what is the underlying metaphor of what's going on in Iraq, and how does it inform the debate about the policy options?

The conceptual metaphor is "the community of nations as a family, democracy as adulthood, the US as father, rogue states as rebellious children, protectorate as education,". This is a patriarchal family conceptual metaphor which according to Lakoff puts the conservatives at a definite advantage in the debate. In Lakoff the liberal frame, if I am not mistaken, is built around a nurturant parent model. (More here). This is half cooked, I need to think about the war vs. occupation debate some more.

But I have no time now, I'll get back.

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 Migeru (migeru at eurotrib dot com) on Thu Jun 22nd, 2006 at 02:05:25 PM EST
[ Parent ]
 Migeru, Colman, others,

 to continue, please move to the new diary enrty.

thanks!

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Thu Jun 22nd, 2006 at 02:07:58 PM EST
[ Parent ]
My point was simply about the supposedly wildly inferior performance of the European economies, a myth that redstar seems bent on perpetuating.

I completely agree.  As I've said in the past, I don't have an enormous problem with either "model," despite my criticisms of both (and I admit that I've probably criticised European models more than I should have).  I think the evidence suggests, quite clearly, that life in Europe is not in steady decline, as the WSJ would have us believe -- not that the WSJ editorial staff knows a damned thing about economics, anyway.

As you probably know better than I, possessing a PhD in Economics, open economies on relatively equal footing -- America and Europe -- are not going to pull ahead of each other to any great extent in wealth because of (what I think is the law of) convergence.  I suspect that America and Europe will remain in roughly the same position, relative to each other, a hundred years from now that they are in today.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 06:14:39 PM EST
[ Parent ]

"US current fiscal posture is indeed irresponsible, but this is not because of the level of the deficit 3 years ago, it is because of the peristance of it in period of growth, and also the structure of that deficit. Not to mention an unsustainable CA deficit ..."

 Bingo!

 "OTOH, that 3% to GDP deficit spending is sufficient in the face of a persistent and severe slowdown for large swathes of the EU and its more vulnerable citizens (the young, the unskilled, and the poor) is not a serious proposition, especially when the ECB has proven signally unwilling to provide stimulative measures on its side. "

 And again!

  "Deficits in and of themselves are not bad things. It's what you do with the proceeds of the debt you take on which determines the utility of the debt.
Clearly, the US fiscal situation today is laughable, but this is not least because the spending priorities are almost completely upside-down, not to mention the receipts side of the ledger."

 And again!

 "The proof that 3% is insufficient and that ECB monetary policy has been tight is the fact that the the economy is not creating a sufficient number of jobs and hasn't for 15 years or so. The situation can be improved by conventional methods, or it can be changed by unconventional methods. Those student demonstrators are pointing to the unconventional methods. But the EU technocrats are simply pointing to a discredited status quo. Why? Because it's hard for a public servant to admit one's been doing a poor job."

  Right again.

  Say, I wonder what would happen if ordinary people could assert their priorities into national budgets!?  Imagine that.  Imagine that average people, assisted by competent accounting experts, had the final word on "what you do with the proceeds of the debt you take on" and other vital issues of economic policies-- I wonder what things would look like then.


"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 12:20:52 PM EST
[ Parent ]

 "we complain about US bubbles and deficits, when in fact they are not much different, expressed in the numbers used for the Maastricht criteria, from Europe's numbers."

 I agree there.

 But, this:

 "It's only a staightjacket if you're burning money like at a casino."

 is an amusing example to have chosen.  The governments of Europe, as do the U.S. states and many other modern advanced nations actaully run "casinos" --in the form of state lotteries!  This fact of course, tells us nothing of interest or impotance, does it?

 This, too, is interesting for the point of view it takes:

 "Debt and inflation are NOT good things, especially when used to sustain consumption, and it wil lalways be the poor that pay the price in the end."

 True, in the abstract, debt and inflation are to be deplored.  They, as the political butlers of industry's great men never tire reminding us, "rob" the poor as well as rich.  But the keywords here are "as well as the rich".  Better then, that inflation be attacked with the weapon of unemployement since, there, it is by far the less fortunate who bear the burden and the most fortunate who largely have the best prospects of escaping it. What a coincidence then, that fighting inflation with unemployment--i.e. the use of high interest rates to curb spending and investments-- is the standard accepted theory everywhere other than in a number of Latin American nations whose economies were brought to the brink of ruin by such IMF-sponsored reasoning and then pushed right over the brink.  The New York investment bankers didn't seem to mind, however.

 "3% of GDP (that's something like 7% of public spending, i.e. usually 15-20% of government spending) is a lot of leeway and flexibility."

  Yes, when all your worldly needs are provided for not only for the present but also for the next several generation of your off-spring, 15 - 20 % of government spending seems like a very generous "cushion", or operating margin.  If, however, you are serious about raising millions of people out of the ranks of miserable want, then from that point of view, you soon discover that your account is less than adequate to the problem.  Solution?  Simply re-define the problem, of course.  Every MBA learns this in the first week of the first term, I suppose.

 "The only reason it felt like a constraint in some countries is because they never made an effort during good times to reduce their deficits (in France blame Chirac and his vicious jab at the "cagnotte"), so they had no leeway in bad times. That's just bad management."

  Spoken like a graduate of the EHESS.  You know, the very terms "deficit" and "surplus" are dervied from the assumptions and the spending priorities contained in budgets written by (and typically for) the management class.  Thus, in asking and expecting that we swallow these terms whole, without question, without worrying about what they imply, is, in itself rather like asking the least well off to define themselves out of existence.  To an astounding degree, they show themselves ready to cooperate in this; though there are some fresh indications that this may change for a time before very much longer.  By the way, "Just bad management," is a charming phrase.  

I'm being booted off this terrminal so shall have to continue this later.

 ciao bello.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 10:46:57 AM EST
[ Parent ]

 is an amusing example to have chosen.  The governments of Europe, as do the U.S. states and many other modern advanced nations actaully run "casinos" --in the form of state lotteries!  This fact of course, tells us nothing of interest or impotance, does it?

Yes, casinos and gaming are a tax on the poor. How relevant is that to my point?


They, as the political butlers of industry's great men never tire reminding us, "rob" the poor as well as rich.  But the keywords here are "as well as the rich".  Better then, that inflation be attacked with the weapon of unemployement since, there, it is by far the less fortunate who bear the burden and the most fortunate who largely have the best prospects of escaping it.

That's totally false. Inflation hurts the poor a lot worse because they have no way to protect themselves, whereas the rich can easily move into inflation-protected instruments or assets. The poor have little or no assets and see their income eaten up immediately by inflation. Inflation is far more regressive than you seem to acknowledge.


15 - 20 % of government spending seems like a very generous "cushion", or operating margin.

What the fuck are you talking about. This is the deficit we are talking about. That means the government spends 120 for every 100 of income it gets. Does that sound reasonable to you? Each of the extra 20 will be paid by your kids, after being inflated into more by the lenders. We are talking about spending a lot more money than we have.

Good management means doing better with the 100. Are you saying that it is impossible? Unreasonable? Unrealistic? It used to be done by a lot of governments until the 70s. I don't remember that period as one of stagnation or retreat of government action.


Spoken like a graduate of the EHESS.  You know, the very terms "deficit" and "surplus" are dervied from the assumptions and the spending priorities contained in budgets written by (and typically for) the management class.  

Oh please spare us the ad hominems. I don't even know what you means by referring to the graduates of the EHESS (which I am not, in any case).

And don't vote for the management classes if you want busget not written by and for the management classes. Hint: they are a small minority of the population and could not win without cheap populism.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 11:21:57 AM EST
[ Parent ]
their income eaten up immediately by inflation. Inflation is far more regressive than you seem to acknowledge."

A fair point, if the wages of the poor didn't rise at the same rate, which was the case when there wasn't a minimum wage and when collective bargaing and other social actions didn't force wage increases in line with that inflation.

But there is a minimum wage now, and there is social action and colective bargaining, so the point is less relevant. Your point on wealthy folks is fundamentally true, but again, only up to a certain point, as inflation is essentially a tax on folks whose wealth is tied up in assets denominated in the currency being depreciated, and you can't hedge that away 100% without selling those assets, not to mention the hedge is not free (ie there's a tolerable rate of inflation for Capital. Hint: I think it's higher than 2%).

Who gets hit hard by inflation? The middle-class, especially in the liberal professions. The core supporters of the PS. Which explains a lot, really, why elements of the PS are arguably more fiscally hidebound than the UMP, and which, coupled with their 35-hour fiasco, explains why they were trounced so badly in 2002.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 11:56:17 AM EST
[ Parent ]
A fair point, if the wages of the poor didn't rise at the same rate, which was the case when there wasn't a minimum wage and when collective bargaing and other social actions didn't force wage increases in line with that inflation.

When was the last time the Federal (and various States') minimum wage was raised in the US? And hasn't collective bargaining power been eroded steadily since the 1970s?

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 12:00:30 PM EST
[ Parent ]
I'm not talking about the US here, I'm talking about the EU, thus all the references to France's political environment on the left.

When inflation hits in the US (and it will, make no mistake) the initial results will not be pretty. Far more regressive impact than in would be in the EU.

OTOH, the impact of an utter lack of inflation in the EU for a couple of decades hasn't been pretty either, just in a different way.

Inflation is not particularly or necessarily regressive in that environment, though if you are a middle-class person who's already got a stable job, it might seem that way to you. What is undeniably regressive is a TVA at 19.6% on most goods (and even 5.5% on food) that is the source of nearly half of government receipts.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 12:16:08 PM EST
[ Parent ]
There is a lot of confusiion in your arguments between France, the Eurozone, the EU, and "Europe". I never know which you're talking about.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 12:17:42 PM EST
[ Parent ]
Sorry about that.

Jerome is talking about inflation impact in relation to a discussion of EU fiscal and monetary policy so I simply assumed that context.

The comments on the PS are more to demonstrate that promoting conservative fiscal and monetary policies when one is putatively a left party is a recipe for losing popularity contests. Over-vigilence on inflaiton might be a campaign winner for upper middle-class people in the liberal professions, but it is not a vote winner for those going from temp job to temp job or working chez Renault (especially in light of the 35-hour implementation). This explains why despite a fin de règne environment on the Right in France, the standard bearer on the left (PS) isn't exactly lighting anyone's fire. The politicos of mainstream parties are out of step with their people in large parts of Europe. They do not inspire, their statu quo is increasingly not credible. And this is a core element of why this is so.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 12:29:47 PM EST
[ Parent ]

 "Jerome is talking about inflation impact in relation to a discussion of EU fiscal and monetary policy so I simply assumed that context."

  Entirely reasonable, too!

 I don't see that an apology is due on your part.

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 12:33:57 PM EST
[ Parent ]
The comments on the PS are more to demonstrate that promoting conservative fiscal and monetary policies when one is putatively a left party is a recipe for losing popularity contests.

You call them conservative, he calls them responsible. There is evidence that the economy does better under left governments (Jospin in France, Clinton in the US), and they keep the books balanced.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 12:35:28 PM EST
[ Parent ]
As for Jospin, he wasn't exactly rewarded in 2002.

Now why would that be?

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 12:36:44 PM EST
[ Parent ]
Neither was Gore in 2000.

You talked of "popularity contest", and nailed it. There is no substance to elections, just popularity contests, disingenuous right-wing populism, and the "what's wrong with Kansas" (or which France) syndrome.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 12:39:12 PM EST
[ Parent ]
I agree with you on the American outcome, but disagree with you on the French one.

Jospin's government was done in on the basis of his handling of the 35-hour week imho, which was emblematic to working people of the PS' treatment of the working class in general. In order to get the partronat on board, Aubry's proposal imposed flexibility on factory workers, who saw their incomes drop or stay the same with increased work-time flexibility. The benefits of policy clearly went to office workers.

On top of this, while the jobs situation improved somewhat under his government, it was more cyclical than structural, and in any event was far outweighed by the 35-hour week implementation. And if you take a look at the electoral map, you'll find that the PS was absolutely drubbed in industrial parts of France.

Why did this happen? The left voters voted in the 1st round for what they saw to be a "credible" left, Laguiller, Besancenot or to a lesser extent Chevènement. This "responsable" left of which you speak is responsible increasingly to that core of supporters in the liberal professions to whom its attentions are most vigilent. But if you're out of a job and living in a 30-year old rundown housing estate run by drug gangs, this doesn't seem all that responsable.

And not everyone's ticket out of ANPE inscription is residency in the UK, Ireland, Canada or the US, as was the case for me, and my brother and sister-in law.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 12:52:23 PM EST
[ Parent ]
Competence is boring.

Maybe all these years of Bush and Chirac will finally open the eyes of a number of people, including on the lyrical left.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 01:16:26 PM EST
[ Parent ]
If you call wage stagnation and high unemployment competence, I'd be curious to hear what you call incompetence.

This competence to which you refer is only relative to extreme incompetence. This is not saying much, and is inspiring no one.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 01:23:43 PM EST
[ Parent ]
During the Jospin government, France enjoyed the largest ever spur of job creation (2 million new jobs), wage increase and reduction in unemployment (from 12.6% to 8.5% in 4 years) ever.

The 35 hour week law was instrumental in this (credited with 500,000 jobs), as was his policy to invest in emplois jeunes (5 year contracts for young people for public service jobs, like assistant positions in schools).

I'm sure you'll tell me that Jospin had nothing to do with it.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 04:27:22 PM EST
[ Parent ]
I'm not talking about the effect on unemployment, with 500,000 jobs being at the high end (I remember DSK saying something like 250K).

I'm talking about the effect on many of the workers of the flexibility that was negotiated into Aubry's implementation of the law esp as regards the payment of heures sups:

Selon une étude de l'INSEE portant sur la période 1997-2002, le pouvoir d'achat des salariés en haut ou en bas de la hiérarchie sociale a progressé très légèrement, mais a stagné ou reculé en son milieu. En effet, le pouvoir d'achat des ouvriers a connu une hausse de 0.8% en moyenne par an (essentiellement liée à l'augmentation du SMIC). Ce taux a été de 1% pour les cadres, mais de seulement 0.2% pour les employés, tandis que les professions intermédiaires ont souffert d'un taux négatif, de -0.2%. Afin d'expliciter cette mauvaise progression du pouvoir d'achat, l'INSEE relève surtout une décrû continue des primes liée à la renégociation de leurs modalités au moment de la mise en place de la réduction du temps de travail

Cadres come out pretty good (not to mention all that additional free time), smicards about even, eveybody else under water. And this does not speak of the quality of the jobs created, we're not talking about in increase in the number of cadres being hired.

In contrast, job creation and structural (for the unemplyment rate did fall to 3.8% and participation rates are 10 points higher than in Europe), in the US was both deep in terms of volume and broad in terms of types of employment. This was a period, remember, of robust global expansion; I should hope France was adding jobs then.

My point is not so much to contest job creation during Jospin's government, which clearly stands out in the recent two decades as the only period of growth. It's to contest some of what is advertized about how it was done, which explains why a certain segment of the electorate did not give it the credit the PS believes it deserves. But I guess I'm part of the lyrical left, along with J.-F. Kahn and company.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 04:46:23 PM EST
[ Parent ]
JK Kahn is indeed the lyrical left.

But let's hear Martine Aubry herself (behind sub wall)


S'agissant de l'emploi, dont le gouvernement Jospin avait fait sa priorité, toutes les études reconnaissent aujourd'hui que les 35 heures ont créé des centaines de milliers d'emplois, autour de 500 000, secteurs privé et public confondus. Au total, 2 millions d'emplois net supplémentaires ont été créés en cinq ans : autant que dans les cinquante années qui ont précédé, alors que la croissance mondiale était moins bonne qu'aujourd'hui. Du jamais- vu ni en France ni ailleurs. Quant aux entreprises, dont il fallait maintenir la compétitivité pour que ces créations d'emplois soient durables, elles ne se sont jamais aussi bien portées. Les réorganisations ont permis 5 % de gains de productivité. A-t-on oublié l'implantation de Toyota en France en plein débat sur les 35 heures ?

Certains prédisaient un recul de la valeur travail. C'est tout le contraire qui s'est produit. Plus que jamais, le travail arrive en tête des valeurs des Français, avec la famille : tous les sondages le montrent. Jamais non plus le nombre d'heures travaillées dans notre pays n'a autant augmenté qu'entre 1997 et 2002 : + 8 %, soit deux milliards d'heures travaillées en plus annuellement. Les 35 heures n'ont pas dévalorisé le travail, elles l'ont revalorisé ; elles n'ont pas divisé le travail, elles l'ont multiplié.

(...)

Qu'en est-il pour les salariés ? Il ressort des enquêtes ciblées sur les personnes ayant bénéficié des 35 heures qu'elles les ont largement adoptées (à 87 % par exemple dans une enquête du ministère du travail). Contrairement à ce que l'on entend dire, il y a peu de différences entre les catégories sociales, le pourcentage pour les ouvriers et employés étant très proche de l'appréciation moyenne (85 % dans la même enquête). La vraie fracture se situe entre les salariés qui bénéficient des 35 heures et ceux qui n'en bénéficient pas. La vraie priorité est donc bien de généraliser les 35 heures et de s'occuper des 15 % de salariés dont les conditions de travail se sont détériorées.

Certains découvrent, à l'occasion du débat sur les 35 heures, qu'il y a des inégalités dans le monde du travail, selon que l'on travaille dans une grande ou une petite entreprise, dans le pétrole ou le textile, que l'on est qualifié ou non qualifié, un homme ou une femme. Les inégalités de salaires comme de conditions de travail ne sont pas nées avec les 35 heures. La lutte contre la pénibilité et le stress au travail et pour de meilleures conditions matérielles de travail est au coeur des politiques sociales. Je suis bien placée pour le savoir, puisque la réduction de ces inégalités a été le fondement de mon engagement professionnel et politique.

Quant au débat sur les heures supplémentaires, rappelons d'abord que la loi sur les 35 heures ne les a jamais interdites ni même réduites. Je suis assez inquiète de voir que la droite et même certains à gauche considèrent que les salariés doivent faire des heures supplémentaires pour gagner correctement leur vie. Globalement, le pouvoir d'achat des salariés a augmenté de 8 % entre 1997 et 2002 et de 16 % pour les 10 % les moins bien payés.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 05:16:48 PM EST
[ Parent ]
Looks like fun with numbers to me.

But who do I trust? Aubry, whose crowning achievement for better or worse was the 35-hour initiative?

Or l'INSEE?

Hmmm.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 05:27:00 PM EST
[ Parent ]
Are you saying that Aubry's numbers are false? They are certainly not incompatible with those you quote.

"Ouvriers" did pretty well in the numbers you quote - thus the lower rungs doing well, as stated by Aubry.

But that has taken us far from your original point, and back to where any discussion of European economies always ends up with: "BUT YOUR UNEMPLOYMENT NUMBERS SUCK". Maybe we should look at living standards, poverty rates, health care coverage as well? But no, we only ever look at the only indicator that, in some countries (basically the big countries of the eurozone) looks bad. Does that sound like someone has a agenda? You bet.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 06:22:12 PM EST
[ Parent ]
I agree, the numbers are consistent. That's why I said fun with numbers.

Why? Because Aubry spins them in a way obviously sympathetic to her legacy in the matter.

OTOH, the INSEE numbers are quite clear: minimum wage workers made out marginally better, managers and the liberal professions came out very well, while all other ouvriers got the shaft over five years. This is far more faithful to the consequences of the implementation when it came ot an actual election (in 2002) but as you seem to underline, large segments of the PS continue to deny what really happened here. (Soit dit en passant, Sarkozy has figured this out.)  

Net/net, Aubry's weighted average income figure is  correct but, if you work chez Citroen (Dutronc clearly not in charge), you made out not so good. Just like Bush is correct to say that the average taxpayer got a significant tax cut when the median got a crappy one and the benefits were top-heavy.

Back to your main accusation, do I have an agenda? Indeed I do. I observe that, as a dual citizen (France/US) I spent a decade in and out of employment in France, and have done a bit more than quite well in America. I see that I am not alone in this. And I have my own idea why this is the case, though I am harshly critical, as our most in my case over here, of US shortcomings in social investment and its pitiful government.

I note that, at least as long as I've worked here (since 1996) while living standards in the US lag those in the the core EU somewhat, growth, in my time in the US the job market vastly outstrips it, income growth outpaces it and opportunities for upward mobility are far more evident. The job market is far tighter, and everything follows from that.

I note also that a permanent underclass has developed in France, and they're not happy about being relegated to that status. I recognize that I too would be unhappy if I were so relegated. I see that they have taken to the streets of late in France but have been more or less misunderstood by both the right and the mainstream left.

We all know that the UMP and similar parties are hopelessly inapt to move things forward in France: 11 years of Chiraquisme should make this evident. OTOH, it is truly disappointing that the PS is as conservative and alack of bold ideas as it is (though I must confess to some hope in the person of Royal and await what she has to say on the Economy). And one source of disappointment is this fascination with tight monetary and fiscal policy that you defend here on these pages: I'm not sure really why so many PS militants share your perspective.

End of day I think we are sharing the same goals, just disagree with each other on the means. Let's not lose sight of this. I certainly will not, as I perhaps did in 2002.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 08:09:28 PM EST
[ Parent ]
See my response as a comment to the bottom of the thread, as this is getting too far out on the right...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Thu Jun 22nd, 2006 at 03:35:44 AM EST
[ Parent ]
Competence is boring.

Tell Prodi about it.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 01:24:12 PM EST
[ Parent ]

"What the fuck are you talking about.[?]"


  "That's totally false. Inflation hurts the poor a lot worse because they have no way to protect themselves, whereas the rich can easily move into inflation-protected instruments or assets. The poor have little or no assets and see their income eaten up immediately by inflation. Inflation is far more regressive than you seem to acknowledge."

 Okay-- here's what the fuck I'm talking about:

 While you're fucking stuck on comparing inflation's harms to poor people's incomes versus its harms to the wealthy's incomes, I'm fucking talking about the harm of inflation on poor people's income as a very poor last-place finisher as against not having a fucking job OF ANY KIND!

  IS THAT ANY FUCKING CLEARER FOR YOU?
 

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed Jun 21st, 2006 at 12:29:05 PM EST
[ Parent ]
And hop hop, this is a good opportunity for me to advertise my fabulously excellent diary on swear words
by Alex in Toulouse on Wed Jun 21st, 2006 at 12:50:30 PM EST
[ Parent ]
Well played, Alex.  Very well played.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 01:54:16 PM EST
[ Parent ]
Roosevelt did, indeed, apply Keynes's views to some extent.  (However, he raised taxes, which is very much anti-Keynesian in a depression or recession.)  He also, like Keynes, recognized that contractions in the money supply were at least closely-linked to recessions.  But the deficit theory is only used when the economy is in a liquidity trap -- when interest rates are at or near zero and cannot be used to stimulate investment.

Politicians can run deficits and stimulate the economy briefly, but, as they continue running deficits, is inflation going to lead to higher interest rates and lower investment, thus reversing the positive effect -- in other words, crowding out?  If you believe in the theory of crowding out, you necessarily recognize the strength of the GSP.

I am aware of the implications of the rule, as is anyone who has ever studied macroeconomics.  I think you're watering-down Keynes.  Don't make Robert Reich's "Keynes just wanted to spend money all the time" mistake.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 21st, 2006 at 01:14:42 PM EST
[ Parent ]

Financially the EU largely functions as a single entity.

What on earth are you talking about?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 05:15:12 PM EST
[ Parent ]
Capital markets are wide open, but the labor market is not, nor is fiscal policy convergent.

The Galbraith piece argues that it is this inconsistency which exacerbates the employment problem in parts of the EU.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 06:15:15 PM EST
[ Parent ]
Most of the Western world functions as a single entity financially these days, so this tells us little about Europe.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 06:40:22 PM EST
[ Parent ]
Free flow of Capital is one thing. Having one's monetary policy dictated from the same place is quite another.

EU monetary integration is at par with that of the US at this point. This is the height of financial integration, and quite a lot more than simply acting as a "single entity" in capital markets as do, say, Capital sourced in Canada and Japan.

What isn't at par with the US is labor mobility, inter-regional wealth transfers via a central, federal organism (eg Brussels or Washington), or fiscal policy.

That's, I believe, the point. That and tight, anti-core EU-growth monetary policy by the ECB.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 09:00:51 PM EST
[ Parent ]
position on the ECB.

How can you call a 2% interest rate for most of the past 4 years as anything but mild? They have been extremely pragmatic and oepn, despite having a narrowly defined mandate to only fight inflation.

Eurozone problems in the past 5 years have NOT come from monetary policy.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 08:13:29 AM EST
[ Parent ]
Presumably "pro-monetary growth policy" means "encourage debt-fuelled asset bubbles by making real interest rates negative". </snark>

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 08:16:03 AM EST
[ Parent ]
I just saw today that French statistics on consumption came out - they were strong, but caused on increase in imports.

You'd think that now that we're finally imitating the US economy (growth fuelled by consumer spending splurging on imported goods), we'd rejoice, but no - the theme of the comments was worry about declining competitivity...

Sigh. We can do nothing right.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Jun 21st, 2006 at 08:30:10 AM EST
[ Parent ]
It's just that the ECB's posture has never been accomodative. Why? Because it doesn't think, nor has it ever thought, that Europe has a problem with economic growth, and its inflation target is far too low (which I won't comment on here other than to say that for god's sake, I thought Duisenberg what going to shit himself when the inflation rate topped a whopping.....are you ready.....3%! But you know, those Dutch central bankers...).

Shorthand for accomodative in my book, assuming no productivity growth is a funds rate no more than 100 bp over the core rate of inflation.

Productivity growth, quite strong in the EU, is in my book worth 150-200 bp of further wiggle room. Ignoring the fact that Germany or France have inflation rates well below some of the periphery nations, but accounting for productivity, the ECB rate ought to be 1.0 to 1.5%, and should have been at this rate as early as late 2001, this latter point being very important.

Add to this the Growth and Stability Pact, which hamstrings member states use of the debt lever, and it's not surprising there's not enough growth to adequately improve the employment picture using conventional means.

Let this continue ad infinitum and you end up in a position where people choose unconventional means, and these aren't always pretty.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 08:55:23 AM EST
[ Parent ]

Francfort's neo-liberal monetary policy

fighting inflation is not neo-liberal. The BCE has been a lot more flexible than is usually given credit for. It's just that it hasn't been criminally reckless with other people's money like Bubbles Greenspan's Fed.



In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 05:17:57 PM EST
[ Parent ]

First of all, monetary conditions in Europe are not particularly accommodative right now:

Monetary conditions have been getting tighter, not looser. Which coincides with a period of slower growth and rising unemployment.

Second, accelerating inflation is not a problem for Europe right now:

Inflation in the EU15 is now running under 2%, and close to 0% in countries such as Germany.

Third, Europe is not at "full employment," even by the perverse standards that terms 8% unemployment as "full employment":

In such an environment, it may be that an unemployment rate above the natural rate may lead to low rather than declining inflation, so Europe's current stable inflation rate does not mean that the European unemployment rate is at the natural rate.

Last, those "Taylor Rule" estimates are entirely dependent on choosing the right inflation target. Choosing an excessively low target may make your monetary policy look accommodative even as it is indeed choking off demand:

If it is true that inflation has been fluctuating around 2% in the past two years, justifying the stability of ECB rates with respect to its target, it is also true that precisely the decision of the ECB to set the target rate at 2% may be seen as the "original sin" of monetary policy in the Euro zone. In fact, the period of low inflation that preceded the inception of the single currency has created an historical anchor that in view of the following events proved to be too low, and hence induced a restrictive bias in monetary policy. I argued elsewhere that a correct target rate for inflation should be 2.5% or 3%.

Is the problem with the European economy excessive inflation and "overheating"? Of course not, the very question is absurd.

The problem is slow growth and high unemployment. Which usually calls for easing monetary policy.

by TGeraghty on Tue Jun 20th, 2006 at 06:07:48 PM EST
[ Parent ]
Well, asset inflation is pretty bad even in Europe. We all agree that this should be taken into account in the US, and so should it in Europe.

I don't see Europe's monetary policies as being particularly tight. What are tight are wage policies in places like Germany.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 06:39:08 PM EST
[ Parent ]
No, you're right. Blowing bubbles is not sound or sustainable policy.
by TGeraghty on Tue Jun 20th, 2006 at 06:56:58 PM EST
[ Parent ]
Asset inflation is a problem in some parts of the EU, and in particular, in some of the parts of the EU which are not part of the Euro-zone (eg the UK).

This being said, France is expected by markets to have inflation of 1.5% or so in both 2006 and 2007. The figures are only slightly higher in Germany, and the Eurozone as a whole, despite rising energy prices, is forecast at about 2%.

There is hardly inflationary pressures in the EU, isolated asset bubbles notwithstanding. The ECB is clearly, as usual, far over-vigilant, to the detirment of most of its citizens.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 09:08:54 PM EST
[ Parent ]
neo-liberal, but combined with tight money, and a constant stream of supplications to member states to liberalize their work rules, cut back on pensions, and reduce worker protections, combined with an over-zealous fixation on inflation, make for a neo-liberal ECB.

Just my opinion.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 06:17:34 PM EST
[ Parent ]
The ECB has been increasing M3 in the 8% range for the last year and a half - at least - and is creating asset price bubble in the EU; as evidenced by housing price increases over the last 5 years.

The EU and US may be in a competitive devaluation of their respective currencies.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Jun 21st, 2006 at 09:45:18 AM EST
[ Parent ]
I realise my comments above are probably a bit harsh and unnecessarily aggressive in their tone.

My apologies. I would not want to discourage you from writing over here!

As I wrote on dKos, I found your post interesting because it underlines the lack of a pan-European budget, something that I'd be keen to change.

I probably disagree with you on the effectiveness of what exists (after all, convergence of living standards towards the European average has been a reality for several poorer countries in the past 25 years), and on the overall level of inequality in Europe, but your point that solidarity actually helps create jobs and prosperity is an important one.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 05:21:53 PM EST
[ Parent ]
No problem. I welcome the debate.

I think it fair that with similar backgrounds, we fall out on different sides of this issue. That's not a problem in my view.

In the public forum it is best to debate openly and if one can't take objections to one's points then one should perhaps not be debating in that forum.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 06:19:37 PM EST
[ Parent ]
speaking of "income redistribution"? Can you give one example of an American state that went from being one of the poorest to one of the wealthiest thanks to these enlightened American policies?

Another flaw in your argument:

"In many ways, the US Federal government acts as an income transfer spigot, taking money from rich states like New York, California, Connecticut, Massachusetts and Minnesota and transferring it to poorer states like Alabama, Mississippi, or the Dakotas. And, while an increasing amount of these transfers are invested in non-productive assets like the bridge to nowhere, the history of this process is an indisputable success: economic re-vitalization of large swathes of heretofore poor parts of the country."

Then why haven't Alabama, Mississippi and the Dakotas experienced anything like the growth and prosperity other states have? I would also argue that the few previously backward states that are doing relatively well today have benefited less from federal largesse than from corporate investment and internal migration patterns. Jobs moved South -- often to escape unions -- and people did, too. And there's an escalating trend of wealthy people retiring in the Southeast/Southwest or the prettier Rocky Mountain states.

Federal "investment," on the other hand, has been unfortunately mostly in the unproductive "bridges to nowhere" you mention.  

by Matt in NYC on Tue Jun 20th, 2006 at 05:15:11 PM EST
Follow the link to growth by state in my piece.

Growth in the SE US, in the Western Plains and in the Rockies outpaces growth in the rest of the US. And these are regions which benefit disportionately from federal income distributons.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 06:21:20 PM EST
[ Parent ]
I'm guessing that, in the case of the Deep South, much of the growth is going on in places like Orlando, Atlanta and the various cities of South Florida (Miami/Lauderdale, Boca Raton, West Palm Beach, etc.).

I assure you: The average New Yorker is far wealthier than the average South-Carolinian.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Jun 20th, 2006 at 06:35:58 PM EST
[ Parent ]
Between 1880 and 1930 per capita income in the U.S. south was about 50% to 55% of the national average; by 1980 the figure was 80% to 90% and it is even higher now.

A good bit of that growth was certainly due to New Deal/Cold War era defense spending, the space program, public investments in highways, rural electrification, as well as state-level investments in public education.

Also, New Deal labor market institutions like the minimum wage and labor unions (even though they were weak in the south, they still set national pay norms in many industries) forced southern businesses to abandon the low-product quality, low-wage, high-labor turnover, low-labor productivity strategy, obsolete technology strategy they had been following since the end of the Civil War, helping to pull the region out of its half-century poverty trap.

by TGeraghty on Wed Jun 21st, 2006 at 01:15:28 AM EST
[ Parent ]
...why haven't Alabama, Mississippi and the Dakotas experienced anything like the growth and prosperity other states have?

The South and Inter-Mountain West, in general, are resource regions with their economies based on extraction - farming, mining, energy production, timber.  These regions are never prosperous when compared to Cities and their import replacement regions.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Jun 21st, 2006 at 09:51:21 AM EST
[ Parent ]
That was perhaps true 50 or even 30 years ago.

Both regions have greatly diversified, as any visitor to Birmingham, Denver or Fargo ND can tell you.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jun 21st, 2006 at 10:03:42 AM EST
[ Parent ]
. . . the notion that the EU has had substantially lower economic growth than the US has been pretty thoroughly debunked here.
by TGeraghty on Tue Jun 20th, 2006 at 05:56:47 PM EST
I'm aware of this, in particular the differences in demographics and in per hour productivity.

This being said, unemployment in many parts of the EU is horribly (and unsustainably) high and this imho is due to lack of sufficient economic growth.

We can argue til we are blue in the face what growth means but what I do know is that unemployment in France is far too high and has been for two decades now. Germany not far behind. So we're talking the core of the EU.

And we can say everything is just fine in Europe, but then myself and a dozen other friends of mine in this small US city I live in who can't get decent jobs there must be wrong. I for one would gladly move back if I could find a job in my field which paid even half what it pays in the US, but the last time I was interviewing over there, three years ago, this was not at all the case.

I think we need to be very carefull making panglossian statements. This is like economists in the US say about how it is the best economy in our lifetime all the while the public mood is morose and consumer confidence is largely negative: there is a disconnect. Ditto Europeans who say there is not a problem in the EU. Those students in France were saying something quite different. I am starting to think maybe the message was not heard as intended.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 06:30:10 PM EST
[ Parent ]
Have you seen the various diaries on unemployment numbers vs disability subsidies and the like?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Jun 20th, 2006 at 06:47:18 PM EST
[ Parent ]
You're right, unemployment in Europe is a problem, I'm not denying that.

It's just that (as your diary indicates), the dominant narrative is that Europe's economy is inefficient and unsustainable, while America's is the opposite. The US model needs tune-up while Europe's needs to be scrapped.

I'm just saying that if you take a closer look at broad measures of living standards, Europe comes out all right relative to the US.

Both economies have problems and both need tune-ups. I think the US's tune-up should bring it closer to Europe in terms of labor's and the public's voice in corporate governance and economic policy, and in the universality and generosity if its' welfare state.

This diary makes some good points as to the direction Europe's tune-up should go.

by TGeraghty on Tue Jun 20th, 2006 at 07:04:40 PM EST
[ Parent ]
I hope the tone of my diary doesn't indicate that I too believe the Europeam model needs to be scrapped. Quite the contrary. I think the European model needs to live up to its billing and engage in far more fundamental and far-ranging investments in its poorer citizenry.

The US model, on the other hand, needs much more than a turn-up, it needs a whole-sale social overhaul. On the other hand, in terms of wealth transfers, its some things significantly right in ways the EU is nowhere near being able to duplicate, and in this, it promotes growth more effectively despite the serious shortcomings and inefficiencies in its social model.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Jun 20th, 2006 at 10:33:35 PM EST
[ Parent ]
No, I didn't think you did.

And yes, the US does require some serious reforms.

by TGeraghty on Wed Jun 21st, 2006 at 01:18:08 AM EST
[ Parent ]
unemployment in many parts of the EU is horribly (and unsustainably) high
In the parts of the Eu where it is highest it's as low as it's ever been (e.g., in Spain it used to be above 20% in the 1980s). Sustainable it definitely is, it's structural.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 06:04:18 AM EST
[ Parent ]
Beware, beware the song of the Mockingbird.

.

by cigonia on Tue Jun 20th, 2006 at 06:36:05 PM EST
we can use their constitution as well, they dont use it anymore.
by fredouil (fredouil@gmailgmailgmail.com) on Tue Jun 20th, 2006 at 06:36:31 PM EST
This is a great thought-provoking diary, thanks for cross-posting.

Is 'Galbraith' the late John K. or his son James K.?

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 03:16:04 AM EST
It's his son.

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Wed Jun 21st, 2006 at 10:04:15 AM EST
[ Parent ]
The EU regional policy was reasonably successful in helping promote development and growth in Ireland, Spain and Portugal (less so in Greece) ? Ironically these redistributions may have been possible thanks to the famous democratic deficit. Enlargement to the 25 was accompanied by changes to regional policy to avoid the budgetary impact and screams of western European voters - just as labour mobility was restricted. I do not see any national politicians with the courage to sell this kind of pan-European solidarity to their voters, even if it is a rational investment that can ultimately promote growth all round. Quite the opposite, there's a glut of politicians ready to play to europhobia and xenophobia...

Re US redistribution - I idly wonder how much is due to pork barrelling and the self perpetuation of the military industrial complex, and how much is invested in a way that serves to promote real growth? Just an innocent question... ;)

by Nick Oz on Wed Jun 21st, 2006 at 06:42:56 AM EST
The high-tech industries in the US were all fueled, one way or another, by goverment purchase.  The 7004 NOR gate was purchased by NASA for the Apollo program in the mid-60's when they were $400/apiece.   This allowed the manufacturers to jump from a craft-based, more-or-less, to mass production tooling.  

Oracle got started as a direct result of Ellison doing Relational Database work for the CIA.

And a little bit of luck, as well: the 4004 was designed as a calculator chip to meet a Hitachi - IIRC - open competition.  It was rejected and only then did Intel throw it on the open market.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Jun 21st, 2006 at 10:00:33 AM EST
[ Parent ]
Very interesting. Thanks.

(Vaguely reminiscent of something I read about some sport, possibly American Football. Certainly the teams compete against each other, but there are also mechanisms that give weaker teams a leg up.)


-----
sapere aude

by Number 6 on Wed Jun 21st, 2006 at 07:15:36 AM EST
I hadn't thought of the analogy that way, and I don't follow American football, but I suspect that such an arrangement makes all parties more prosperous.

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Wed Jun 21st, 2006 at 10:05:30 AM EST
[ Parent ]
Definitely the way the weaker teams get the first pick of the NBA draft is a redistributive mechanism.

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 Migeru (migeru at eurotrib dot com) on Wed Jun 21st, 2006 at 10:13:42 AM EST
[ Parent ]
That's what I was looking for. Thank you.


-----
sapere aude
by Number 6 on Wed Jun 21st, 2006 at 11:35:46 AM EST
[ Parent ]

I agree, the numbers are consistent. That's why I said fun with numbers.
Why? Because Aubry spins them in a way obviously sympathetic to her legacy in the matter.

OTOH, the INSEE numbers are quite clear: minimum wage workers made out marginally better, managers and the liberal professions came out very well, while all other ouvriers got the shaft over five years.

Ouvriers (a vast category) did almost as well as cadres (0.8% vs 1%), so your interpretation of the very INSEE numbers you provide is already tendentious.


This is far more faithful to the consequences of the implementation when it came ot an actual election (in 2002) but as you seem to underline, large segments of the PS continue to deny what really happened here. (Soit dit en passant, Sarkozy has figured this out.)

Yes, the left wanted a more lefty Jospin, so voted for Besancenot & co to get that message across. That worked really well, didn't it?  


Net/net, Aubry's weighted average income figure is  correct but, if you work chez Citroen (Dutronc clearly not in charge), you made out not so good. Just like Bush is correct to say that the average taxpayer got a significant tax cut when the median got a crappy one and the benefits were top-heavy.

Back to your main accusation, do I have an agenda? Indeed I do. I observe that, as a dual citizen (France/US) I spent a decade in and out of employment in France, and have done a bit more than quite well in America. I see that I am not alone in this. And I have my own idea why this is the case, though I am harshly critical, as our most in my case over here, of US shortcomings in social investment and its pitiful government.

I note that, at least as long as I've worked here (since 1996) while living standards in the US lag those in the the core EU somewhat, growth, in my time in the US the job market vastly outstrips it, income growth outpaces it and opportunities for upward mobility are far more evident. The job market is far tighter, and everything follows from that.

Numbers do not substantiate what you write, which may be influenced by your personal experience.

See my graph above, which showed that France created more private sector jobs than the US.

We've discussed recently studies that show that "upward mobility" is now much weaker in the US than in Europe (just check this week's Economist).

Do I need to bring out agan the graph that shows that GDP per capita growth is essentially identical over the past ten years in France, the eurozone and the USA, at 2%/year? And that period includes a boom and a bust in each areas, so it is more easily legitimately comparable.


I note also that a permanent underclass has developed in France, and they're not happy about being relegated to that status. I recognize that I too would be unhappy if I were so relegated. I see that they have taken to the streets of late in France but have been more or less misunderstood by both the right and the mainstream left.

Well, they certainly have been wildly misunderstood (or overinterpreted) in the US press. Americans talking about an "underclass" in France when France has the lowest Gini coefficient of the G7 and the US the highest by far (and the lowest social mobility) leave me dumbfounded, frankly.


We all know that the UMP and similar parties are hopelessly inapt to move things forward in France: 11 years of Chiraquisme should make this evident. OTOH, it is truly disappointing that the PS is as conservative and alack of bold ideas as it is (though I must confess to some hope in the person of Royal and await what she has to say on the Economy). And one source of disappointment is this fascination with tight monetary and fiscal policy that you defend here on these pages: I'm not sure really why so many PS militants share your perspective.

Well, they obviously don't, as demonstrated by the "non" vote, so I don't know what you are worrying about. I am in a minority, both on the left and on this site, if you haven't followed our earlier debates here.


End of day I think we are sharing the same goals, just disagree with each other on the means. Let's not lose sight of this. I certainly will not, as I perhaps did in 2002.

OK.
I'll take your word for it.


In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 22nd, 2006 at 03:47:41 AM EST
I didn't mean to piss you off this much. You were nice enough to invite me to post this thing here and I certainly didn't mean to raise so many hackles in the commentary.

If you take my look at the numbers as being tendentious, I would only say I certainly did not mean to so be. In looking at the INSEE numbers, I interpreted them as follows: minimum wage workers, up 0.8%/annum. Cadres, up 1.0%/annum. Everyone in between, either barely above water or slightly below. I understood INSEE's comment on why the lowest paid workers came out better than those in the middle (being related to increases in the SMIC) as meaning the sorts of workers we are refering to are not machinists, production operators or bus drivers, but rather, those at the very bottom. And I do not contest that those at the very bottom did only a little poorer than those at the top. I only point out that everyone in the middle did not do so good, and also that in order to see this stagnation, a lot of flexibility was required as part of the implementation: weekend work, 2nd and 3rd shift work and so forth. And this sort of flexibility works a bit different when you're driving RER trains than when you are crunching numbers in an office like I presume you or I do. That's all I'm saying, and I posit that this is why many abandoned the PS in 2002 and either did not vote or voted for the more red shades. And my further evidence of this is the fact Aubry herself lost in 2002 in a PS stronghold: people were not happy with her management of that 35-hour implementation. That's my take on it anyhow, perhaps you have some idea why more people voted for the lyrical left in 2002 than for the PS other than most of us are unreasonable and emotional dreamers.

On growth, here's what I see:

Last time France was kicking American butt on GDP growth was the '80's. Seems to me there was a fair amount of serious socialism going on in France at that time.

Finally, I am aware of the yellow press in America, as I live with it daily. But my observations on the status of long-term unemployment among youths, and on what was going on last fall and again this spring came not from the American press, but from both the French press (Le Monde and Marianne both to which I subscribe) and my annual visits to La Seyne/Mer to see family. Certainly, if you are jobless and prospectless in France your sort is far better than in the US and, more importantly, the sort of your children is too. But that's not the issue I am raising here, my issue is we could be doing better not with more neo-liberal reform, but with more socialism, including that of the sort America unavowedly employs, and further, that unemployment, especially among young people, is far too high and has been for far too long. It's a good thing that the world doesn't come crashing down when you are jobless and down on your luck in France. It would be a better thing if the chances of you being out of work and down on your luck were minimized. Much of the so-called integration problem would simply go away if you had unemployment under 5% for 5 years. It's really a dignity issue in my book. And, quite frankly, I think targetting 8% as the NAIRU is not only unserious, it is criminal. If we can't do better than that via conventional means, than unconventional means are necessary.

Again, I don't mean to raise you ire and I argue in good faith. And I am not the only one who won't be making the same type of vote again next year, but I would very much like it if the programme started addressing these issues in creative and bold ways in earnest.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Thu Jun 22nd, 2006 at 10:55:53 AM EST
[ Parent ]
So what do you think of Segolene Royal's recent comments on the 35h week?

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 Migeru (migeru at eurotrib dot com) on Thu Jun 22nd, 2006 at 11:00:33 AM EST
[ Parent ]
I think she's absolutely right, though while she is correct to say that many irresponsible bosses made for what has happened, it is also correct to say this development was a predictable consequence of the way in which it was implemented viz. flexibility.

She clearly gets it, though.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Thu Jun 22nd, 2006 at 11:22:34 AM EST
[ Parent ]
Ok, but France still kicks butt in the delicate humour category ;)

By Larcenet:

  • "A new disease, the virus of skepticism, has struck hard at the local population"

  • "Naturally, this information must be put in the conditional tense"
by Alex in Toulouse on Thu Jun 22nd, 2006 at 11:22:44 AM EST
[ Parent ]
The untranslatable grammatic pun here is that "has struck hard" is in the conditional tense in the first sentence, even though it does not have a conditional meaning.

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 Migeru (migeru at eurotrib dot com) on Thu Jun 22nd, 2006 at 11:27:37 AM EST
[ Parent ]
I just couldn't find a way to translate it (and knew you'd get it too, as Spanish and French tenses are similar [if not identical])
by Alex in Toulouse on Thu Jun 22nd, 2006 at 11:30:36 AM EST
[ Parent ]
Thanks for providing this.

I am of course glad you posted this here, and are contributing to the discussion with hard facts and interesting insights - and I do hope you will continue to do so.

I have reacted a bit vigorously because some of the points we're discussing have already been discussed many times on this site (which I am not sure if you've read much up to now), and one pet peeve of mine is the notion, which you tend to reflect to some extent, of a very real superior performance of the US model compared to the European one and the French one in particular, on growth, employment and so forth.

The numbers you provide above to point out to a somewhat superior performance of the US, and have a slightly bigger difference (2.9 vs 2.4% for 1995-2000, and 1.2 vs 0.9% in 2001-2005 for US vs French GDP growth per capita) than some I've been relying one, like this FT graph:

where the difference is even smaller.

In any case, this above, plus my graph which showed that France created more private sector jobs in 1996-2002 (admittedly a favorable comparison period for France as it includes the US recession but not the French one, but no more unfair than comparions that do the opposite and are regularly used in the media - typically those starting in 1991 or 2001, both years the trough for the US economy) point out to much smaller performance differences than usually recognised - and that's before taking into account the debt binge in the US, or the growing inequality which makes GDP, an "average" number, so much less relevant, not to mention things like poverty levels or healthcare access, which could be legitimate criteria for evaluation of economic performance.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Jun 22nd, 2006 at 11:50:57 AM EST
[ Parent ]
 To continue, please see the new diary entry,
here , thanks!

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
by proximity1 on Thu Jun 22nd, 2006 at 02:04:28 PM EST
btw as a massachusettser I am DEEPLY opposed to sending my tax dollars to the south and midwest. i would do anything legal to stop that. the minute a candidate from either party runs for office eliminating this ill support them.

it the sotuherners want more infrastructure they can pay for it themselves. i should not have to, we have our own problems here.


Life is not a dress rehearsal

by johnfire (johnfire@christopherrehm.com) on Thu Jun 22nd, 2006 at 08:50:25 PM EST


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