Jun 09, 2013 at 12:10 pm
[Uh-oh—the sun is out and I really have no excuse for not digging up weeds and pruning bushes. So let me be brief here.]
I found this piece on different rates of job growth in different countries to be an interesting survey but it somehow skirted a central point, perhaps because it’s so obvious that it doesn’t need emphasis—though I think it does: these different jobs outcomes all grow from differences in economic policy.
–Financial regulation: Why did Canada avoid the housing bubble from which we’re still recovering? Because their more highly regulated credit system did not inflate such a bubble.
–Labor market policy: The piece correctly notes that German employment stayed strong in part due to their work-sharing policy, where instead of laying off people, reduced hours are spread around the workforce and part of the lost compensation is made up through the unemployment insurance system. The thing is—after considerable legislative squabbles, we know have that same program here in the US! But it’s only in use in a few states—policy makers would be smart to figure out why it’s not being implemented more broadly and get it up and running.
–Trade policy: The piece states: “Other countries have generated jobs on the basis of strong exports.” True—and again, it’s policy. Germany imports labor demand; we export it. See here.
–Sluggish US recovery: Obviously, a policy matter. Sequestration seems clearly implicated in the loss of 45,000 federal government jobs since the automatic cuts began in March of last year. As noted above, this is why you don’t want your deficit coming down so quickly right now.
There is no laissez faire, no pristine markets generating employment and income gains or losses based on the unfettered free hand guiding supply and demand to their optimal equilibrium. That only exists in models. In the real world, it’s all about the policies. And those with the power to move them their way.
And with that, I leave the economic weeds for the actual weeds.
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