by Colman
Tue Oct 23rd, 2007 at 08:02:03 AM EST
In an exciting development the Germans have excited the wrath of the economists yet again. From Telos-EU
Hello, is there an economist in the house? Evidently, those currently in power missed a key opportunity to explain to voters why tough labor market reforms in Germany – significant cuts in both the level and duration of unemployment benefits, increased pressure to take up work, combined with deregulation of the temporary help service and part-time job markets – were sorely needed to raise the sustainable path of output, and not simply self-flagellation. Instead, two years have passed without further action – a missed opportunity to organize majorities for deeper reform while the economy is growing. Vacancies are at an all-time high, labor shortages are beginning to emerge and, at an official unemployment rate of around 8.5%, wage growth is picking up and unions are striking again for more. Eyeball econometrics suggests that the equilibrium rate of unemployment has not fallen as much in Germany as it has over the past two decades in the Netherlands, Denmark, Ireland, and the UK. Unlike those successful reformer countries, Germany started, but has not yet finished its supply side homework. If it backslides now, it and the rest of Europe will pay the price when the next downturn comes.
He did it: he committed the unforgivable sin of using the official 8.5% rate rather than the OECD rate, which is, as
Angry Bear pointed out when provoked by an article in a US paper, 6.4%. Bad, bad, Micheal Burda. He also trots out a grossly dishonest comparison between Ireland (4M people, pumped up on rapid economic catch-up and EU funds) and Germany (82M people, recovering from bad decisions joining the euro and reunification).
