by Jerome a Paris
Wed Jan 24th, 2007 at 07:03:48 AM EST
The bad news is that a system delivering neither dynamism nor high employment is failing.
Following the steps of recent Nobel prize winner Edmund Phelbs, Martin Wolf sees in the above graph an indictment of the 'corporatist' economies of Europe.
“The shortcoming of the system was the continent’s corporatist economic system (or systems), a system constructed of big unions, big employer confederations and big banks, all mediated by a big public sector – a system that had been built up starting in the 1920s on the belief that it would be better than capitalism.”
Prof Phelps suggests that the durability of continental corporatism derives from culturally embedded hostility to the rewards of business life.
That's the jist of it, isn't it: "the rewards of business life". From the above graph, it appears that most of Europe had a big catch up period until the 70s, and has been more or less stable, in comparison to the US, since then. That suggests, indeed, stable cultural choices on both sides of the Atlantic, or simply different ways of measuring prosperity.
Of course, people will point out to the apparent decline of European countries in the last 15 years.
But I'll stick to apparent for now, for two simple reasons: