A week of two economic models
ECONOMY A: On Tuesday, this country announced unemployment of 12.4 percent amounting to its highest jobless rate since the 1930s. As well, its expected growth rate was revised down from a predicted 1.4 percent to 1 percent. Germany or the USA?
ECONOMY B: Yesterday, this country announced that it had added 262,000 jobs in February — double the number for January, which is consistent with growth of 4 percent. The median duration of unemployment decreased to 9.3 weeks. Germany or the USA?
Economy A is Germany. Economy B is the USA. The most important contrastive statistic from those quoted above is the one about the median duration of unemployment in the US because when someone loses their job in Germany they rarely reenter the job market. The doors are shut firmly in their faces. On top of this dreadful fact, some 30,000 businesses go broke each month in Germany. To sum up: Compared with the neo-liberal, Anglo-Saxon model that's keeping unemployment at around 5 percent or lower and is powering growth in Australia, New Zealand, the USA, Britain and Ireland, the German statist model has failed. Or do you consider mass unemployment and almost zero growth signs of success?
Comments
Hi Eamon,
The growth warning triggered anger even from government supporters, who said the Social Democrat-Green administration of Chancellor Gerhard Schroeder had to do more.
This is, imo, the jist of the problem. Jobs are produced, generically speaking, by less government involvement, not more. High tax rates and generous welfare benefits have never produced a healthy economy. Good luck to the German government is scaling back welfare subsidies, producing jobs, and making the German public happy.
Of course the US isn't all wine and roses. 5.4% unemployment doesn't say much about the quality of these jobs, but I have a lot more faith in the hardworking individual in the US to go forth and seek a better job than his counterpart in Germany( or France for that matter ), simply because there are more opportunities and less incentives too stay unemployed.
Cheers.
Posted by: Rupert | March 5, 2005 8:14 PM