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.
Before he went senile, the linguist/philosopher SI Hayakawa wrote several quite reasonable, readable books. In one, entitled Language in Thought & Action there is a chapter on rational (and other) approaches to the problem of unemployment. His persuasive argument was that, since unemployment was a structural necessity in the Capitalist system--it increases worker 'discipline,' ahd keeps wages down--it was logical to establish a system that supports rather than punishes the unemployed.
#1 Posted by Woody, CJR on Thu 7 May 2009 at 01:16 PM
One thing they don't touch on is the effect of different systems on employee behavior. The good thing about the US system is that it encourages the unemployed to get out there and look for a job ASAP. The downside is that they may accept a sub-par job out of necessity.
#2 Posted by Chris Corliss, CJR on Thu 7 May 2009 at 02:45 PM
It seems to me that the US government would have to borrow the money to pay those kind of benefits even if the worker was taxed @ 50%. Could we trust congress to keep their hands off of the rainy day money? There would be talk of lock boxes and IOU's and we would have to subsidize the already confiscatory taxes. We need to keep the unemployed uncomfortable in their circumstance and Congress away from our money.
#3 Posted by paul, CJR on Thu 7 May 2009 at 04:56 PM