The Journal also does well not to oversimplify the story, something it would have had to do in a smaller space. It notes that “Europe” is not a monolith—that taxes and benefits are much lower in the UK and Eastern Europe, for instance.
Less-generous European countries include Greece, where initial benefits replace less than half of lost wages, on average. Heavily indebted households in countries such as the U.K. and Ireland, where property and lending bubbles have burst, are also particularly vulnerable in the recession. Economic pain in less-developed Eastern Europe is a separate and much deeper problem.
I think the Journal should also have noted that the Germans get many more benefits from their higher taxation—not just rich unemployment benefits—especially since it’s chart looks at total wage-tax burden, not just what unemployment costs.
Also, it might have pointed out that lots of smart folks now acknowledge that the past fifteen or twenty years have been an economic mirage, a series of bubbles inflated by the financialization of the economy. So what’s been a clear American lead in the economic-growth statistics needs to be revisited.
Krugman a couple of weeks ago noted a study that signaled that the productivity gap between the U.S. and Europe since 1995 came significantly from the financial sector. That turned out to be fake, and ultimately harmful, productivity.
Still, it’s overall a nice effort by the Journal.