Say noto Euro-socialism

[hugo]

European Unemployment: Lessons for the United States

Brief Analysis

 

Wednesday, May 26, 2004

 

 

by William B. Conerly, Ph.D.

 

 

 

Europe is a great place to visit — but don’t try to find a job there. Unemployment averaged 8.8 percent in Europe last year, compared to 6.1 percent in the United States. [see Figure I.] Americans have been disappointed with a weak labor market in the last few years, but put this into perspective: Over the last 12 years, America’s worst unemployment rate was better than Europe’s best unemployment rate.

 

Unemployment Lasts Longer in Europe than in the United States. In the recent economic downturn, Americans have been concerned with the length of time it takes unemployed people to find new work. Although our own performance is less than we could — and should — strive for, it is better than Europe’s by a country kilometer. Figure II shows how long people spent looking for work in different countries in 2002, the most recent year for which data is available for all of them. (The duration of unemployment was generally higher in 2003, when, for example, the U.S. average duration rose to 4.4 months.) What’s wrong with Europe? Why should it take so long to find work in such developed countries as France or Switzerland? There are a number of reasons for Europe’s disappointing performance.

 

More Generous Benefits. First, unemployment insurance benefits are more generous in Europe than in the United States. The “replacement rate,” the portion of previous income replaced by unemployment insurance benefits, is generally much higher there. According to a study by the Organization for Economic Cooperation and Development (OECD):

 

Although lower-wage American workers often receive 50 percent of their former wages, the replacement rate is much lower for high-income workers because of ceilings on benefits.

Thus, in the United States, unemployment benefits replaced an average of 25 percent to 29 percent of a worker’s wages in 1995.

In comparison, benefits are a much higher percentage of former earnings in a number of European countries, including Belgium (51 percent), France (58 percent), Switzerland (70 percent) and Denmark (71 percent).

The impetus to find another job falls as replacement rates rise.

 

More Months of Benefits. A second factor in Europe’s high unemployment rates is the long period of time for which benefits are paid. Unemployment insurance benefits in the United States typically are exhausted after six months. However, a number of European countries pay over 40 percent of previous wages in the second and third year of unemployment. A few countries keep the benefits flowing even into the fourth and fifth years of unemployment.

 

Long eligibility periods encourage workers to delay their job search efforts until their unemployment benefits are about to run out. Note also the one country with a shorter duration of unemployment than ours: In Mexico, dismissed workers are entitled to a lump-sum payment from their former employer, but the worker does not have to remain unemployed to receive this benefit.

 

Wage Inflexibility. A third factor hurting European workers is wage inflexibility. In the United States, wage growth is depressed in recessions. When wage growth slows, the number of workers hired increases. Wages tend to be more rigid in Europe, where they are often set by union bargaining with an entire industry. As a result, wage growth does not slow when labor is in surplus, thus limiting the demand for additional workers.

 

High Costs of Employment. Finally, no discussion of European unemployment is complete without mentioning employment protection. Europeans dislike layoffs, and they make it very costly for companies to dismiss workers. The result is actually harmful to the unemployed. Because it is so expensive for a company to terminate an employee, firms are very hesitant to hire workers in the first place. In contrast, American companies test the market by expanding their work forces. If the expansion doesn’t work out, employees are let go. It sounds ruthless, but it has resulted in stronger employment growth in the United States than in Europe.

 

Which is quantitatively the greatest factor? Economist Stephen Nickell surveyed the research on European unemployment. He concluded that the greatest effects on unemployment come from “...generous unemployment benefits that are allowed to run on indefinitely, combined with little or no pressure on the unemployed to obtain work and low levels of active intervention to increase the ability and willingness of the unemployed to work.”

 

Conclusion. America can take some lessons from the European experience. Unemployment insurance benefits must be accompanied by a strong work-search expectation. Rapid reemployment is best for the unemployed person, and best for the economy as a whole. The worst case scenario would be for states to increase unemployment benefits — or Congress to extend them once again — while reducing the expectation that recipients go out and find work.

 

Article is a bit dated but the pattern of unemployment has continued through the present.

[snafu]

And with our unemployment rate at 6.5 % now and the auto's industries big three needing another freebie grant, is it prudent for the president elect to bankrupt an entire industry such as he's trying to do with the coal industry?

I know I know he'll re-tool and re -train America and create jobs making wind turbines an such. Never mind creating jobs and suppling America with the untapped energies we already have.

 

 

http://www.latimes.com/news/printedition/front/la-fi-jobs8-2008nov08,0,7272359.story

[ImWithStupid]

The Tax System - Explained With Beer

 

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

 

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

 

So, that's what they decided to do.

 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

 

'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.'

 

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

 

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

 

And so:

 

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33% savings).

The seventh now pay $5 instead of $7 (28% savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

 

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

 

'I only got a dollar out of the $20, 'declared the sixth man. He pointed to the tenth man,' but he got $10!'

 

Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I!'

 

'That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'

 

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'

 

The nine men surrounded the tenth and beat him up.

 

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money among all of them for even half of the bill!

 

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

 

OR...

 

The Obama plan (alternate Scenario – insert at the appropriate place in the story )

 

… “Since you are all such good customers,” the bartender said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.” Since everyone had already put his fair share on the table, the bartender proceeded to take $80 from the pot and left $20. One of the men said, “Hmmm…. $20 - ten men….I guess that means we each get $2”. Everyone took their $2 and want home happy.

 

The next night, when it came time to pay, everyone put in $2 less than they normally paid. The pot came to $84. The fifth man, who hadn’t put in anything to begin with, quickly grabbed a dollar and explained that on the previous night, he’d paid $1 but gotten $2 back, so he needed the dollar to be fair. The 4 men who had paid nothing to begin with, looked at the $3 left on the table and immediately grasped the situation. “Hey” they all began yelling, “Where’s our $2?” When the tenth man began to protest and tried to explain the situation, they dragged him outside, beat him up and took their $2. And for good measure and to teach him a lesson not to short change them next time, they took an extra $20. “After all”, they told him when he tried to resist, “You’re a lot better off than we are, and can afford it.”

 

The next night, the tenth man didn’t show up for drinks, so the nine sat down…..

 

 

David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

 

For those who understand, no explanation is needed.

 

For those who do not understand, no explanation is possible.

[wez]

I'd say our unemployment rate is higher than what they say.. They quit counting people who give up looking for jobs and run out of unemployment benifits for one.. Toss in the underemployed and it gets even uglier.

[Old Salt]

"Underemployed" is still employed. There's a paycheck. A lot of people don't want to relocate to find a job suitable for their training.

[wez]

"Underemployed" is still employed. There's a paycheck. A lot of people don't want to relocate to find a job suitable for their training.

 

No one wants to move to India.. Aint gonna get better til we start actually producing things again. Problem is, gotta compete with slave labor.. It's a dilemma

 

Big fat dose of deflation is what the Doctor ordered..

[Old Salt]

No one wants to move to India.. Aint gonna get better til we start actually producing things again. Problem is, gotta compete with slave labor.. It's a dilemma

 

Big fat dose of deflation is what the Doctor ordered..

The cost of living is a lot cheaper in India.

[wez]

The cost of living is a lot cheaper in India.

 

Gonna have to get that way here too...

[ImWithStupid]

No one wants to move to India.. Aint gonna get better til we start actually producing things again. Problem is, gotta compete with slave labor.. It's a dilemma

 

Big fat dose of deflation is what the Doctor ordered..

 

All jobs will be in India/Asia, or Central/South America when the corporations move there to avoid going from the country with the second highest corporate tax rate to the first highest.

[Old Salt]

No one wants to move to India.. Aint gonna get better til we start actually producing things again. Problem is, gotta compete with slave labor.. It's a dilemma

 

Big fat dose of deflation is what the Doctor ordered..

A good depression should accomplish that.

[wez]

All jobs will be in India/Asia, or Central/South America when the corporations move there to avoid going from the country with the second highest corporate tax rate to the first highest.

 

 

They've been doing it for the last 15 - 20 years.. Whatever.. Their slaves can buy their sh t once they run out of Americans who actually have some money.. Wont be long.. Most are prolly over 50 already..

[ImWithStupid]

I understand the theory behind top down economics, where the businesses are given breaks to re-invest, expand and add jobs, even if it isn't perfect, but I still have yet to find someone who can, logically, explain how bottom up economics works and if it does really work, why are they now saying that it will have to be put off being implemented until after the old top down/capitalism economics fixes the economy, to put it into effect.

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[wez]

A good depression should accomplish that.

 

 

It's gotta happen.. All this crap to prevent it only makes things worse. Can't print and bailout our way to prosperity..

[ImWithStupid]

They've been doing it for the last 15 - 20 years.. Whatever.. Their slaves can buy their sh t once they run out of Americans who actually have some money.. Wont be long.. Most are prolly over 50 already..

 

No. Some jobs have left, but there is nothing that keeps corporations from leaving. If they were smart, and no longer have any tax incentive, they would pack up, move overseas and be just fine, like Japanese companies have been for years.

 

No tax burdon, but the US will still buy the goods. Ask China how that works.

[wez]

I understand the theory behind top down economics, where the businesses are given breaks to re-invest, expand and add jobs, even if it isn't perfect, but I still have yet to find someone who can, logically, explain how bottom up economics works and if it does really work, why are they now saying that it will have to be put off being implemented until after the old top down/capitalism economics fixes the economy, to put it into effect.

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Top down doesn't work.. they'll cut off their nose to spite their face in an endless search to "cut costs".. which = cutting people and jobs and going where slavery is acceptable.. Those'll be the customers after they riot for better wages and protection like people did here in the 50's..

 

 

What's gonna happen to us? Who knows.. 3rd world livin'?

[wez]

No. Some jobs have left, but there is nothing that keeps corporations from leaving. If they were smart, and no longer have any tax incentive, they would pack up, move overseas and be just fine, like Japanese companies have been for years.

 

No tax burdon, but the US will still buy the goods. Ask China how that works.

 

 

 

People need jobs and disposable income to buy those goods.. Demographics are changing.. Old people who had job security and savings aint gonna live forever.. And for the young, the credit well will run dry and come to a point where borrowing is not an option anymore. Already happening.. Most people under 50 got a long ways to go to get to broke.

[Old Salt]

I understand the theory behind top down economics, where the businesses are given breaks to re-invest, expand and add jobs, even if it isn't perfect, but I still have yet to find someone who can, logically, explain how bottom up economics works and if it does really work, why are they now saying that it will have to be put off being implemented until after the old top down/capitalism economics fixes the economy, to put it into effect.

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.

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I think the thought process is something like this:

 

If you give everyone enough money to buy everything they not only need, but want, the companies will make enough profit.

 

Of course, there's an easier way to do that than the Robin Hood process. It's called reducing taxes so people have more money in their pockets.

[wez]

I think the thought process is something like this:

 

If you give everyone enough money to buy everything they not only need, but want, the companies will make enough profit.

 

Of course, there's an easier way to do that than the Robin Hood process. It's called reducing taxes so people have more money in their pockets.

 

 

It's been reverse Robinhood.. Taking from the poor and giving to the rich for decades.. Workers have value more than 1/100,000,000 or more compared to the average CEO and his buddies for the last 20 years.. Wealth is being, and has been concentrated into fewer and fewer hands for quite some time.. Hardly the recipe for a healthy economy. It's a recipe for slavery..

[ImWithStupid]

I think the thought process is something like this:

 

If you give everyone enough money to buy everything they not only need, but want, the companies will make enough profit.

 

Of course, there's an easier way to do that than the Robin Hood process. It's called reducing taxes so people have more money in their pockets.

 

Give them money and stuff from where? From the corporations they buy the stuff from? Doesn't that just recycle the same money? If that's the case there is no room for expansion.

[Old Salt]

Top down doesn't work.. they'll cut off their nose to spite their face in an endless search to "cut costs".. which = cutting people and jobs and going where slavery is acceptable.. Those'll be the customers after they riot for better wages and protection like people did here in the 50's..

 

 

What's gonna happen to us? Who knows.. 3rd world livin'?

What you call "slaves" are people earning a wage comensurate with their local economy, for the most part. Things are cheaper for them.

 

My dad always told me that I'd never get rich working for wages. It's just a fact of life.

[Old Salt]

Give them money and stuff from where? From the corporations they buy the stuff from? Doesn't that just recycle the same money? If that's the case there is no room for expansion.

You got it.

[ImWithStupid]

Top down doesn't work.. they'll cut off their nose to spite their face in an endless search to "cut costs".. which = cutting people and jobs and going where slavery is acceptable.. Those'll be the customers after they riot for better wages and protection like people did here in the 50's..

 

 

What's gonna happen to us? Who knows.. 3rd world livin'?

 

You're delusional. I've seen bottom up, where the bottom is given what they need if they work mindlessly for the government programs and industries. It's no way to live. It's socialism.

 

Top down without fear of retribution is where it doesn't work. When Government subsidies or promises of backing takes away fear of mismanagement or greed is where capitalism doesn't work. Capitalism left with the fear of failure, works.

[ImWithStupid]

You got it.

 

That's where you get the real modern day slaves. Not capitalism.

[wez]

What you call "slaves" are people earning a wage comensurate with their local economy, for the most part. Things are cheaper for them.

 

My dad always told me that I'd never get rich working for wages. It's just a fact of life.

 

 

Don't need to be rich.. But peoples labor should be their own, not taken and given to billionaires..

 

 

I'd say 6 - 15 year old kids who work 16 hours a day for 7 days a week are slaves regardless of the pay. People were not built to work their life away so a few dicks can live in total freedom in the lap of luxery, or else.

[wez]

You're delusional. I've seen bottom up, where the bottom is given what they need if they work mindlessly for the government programs and industries. It's no way to live. It's socialism.

 

Top down without fear of retribution is where it doesn't work. When Government subsidies or promises of backing takes away fear of mismanagement or greed is where capitalism doesn't work. Capitalism left with the fear of failure, works.

 

No one should be given anything.. It's the value that's f cked up.. Tell me, who's more crucial to society, a garbage man or a baseball player?

 

 

And where did you think I support government doing anything? They're the fukking problem.