Edward Hugh writes that morale in Germany appears to be low:
A Fistful of Euros: Watch Your Piggy Bank!: by Edward Hugh: Interesting piece in the FT today about the imagined consequences of the new German “Hartz IV” laws. These laws will among other things reduce non-means-tested unemployment benefits to one year’s duration. The measure forms part of the package of labour market ’structural reforms’, and personally I see little to argue with here.Posted by DeLong at August 9, 2004 09:41 AM | TrackBack | | Other weblogs commenting on this postThe interesting part relates to the perceived consequences:
Last week in the east Berlin suburb of Hellersdorf a man forced three youngsters at gunpoint to take off their clothes, burn them, and dance around an improvised bonfire. The incident may have looked perplexing, but local reaction quickly blamed the usual suspect: the reform of Germany’s unemployment laws.
“When the new rules about unemployment benefits take effect, incidents like this will multiply,” a resident told the Berliner Zeitung daily. “I’ll have to get a pit-bull.”
Now as the article quickly goes on to point out, there is no reason whatsoever to imagine that the two events (the Hartz laws and the “bonfire of the vanities”) are in any way related, what is interesting is to note that some people see them as being so. This must be some reflection of the national mood in Germany.
As the Hellersdorf incident shows, anything that goes wrong in Germany, it seems, can be blamed - however wrongly - on Hartz IV. In another case, press reports warned that unemployed parents would be forced to raid their children’s piggy banks before they receive benefits.
Adding to the gloom is last week’s news that industrial production in Germany declined in June at the fastest rate in the last ten months. I just don’t see where people get the ’recovery round the corner’ idea here...
See, all the 1st world industrialized nations are suffering because of unemployment caused by low wage outcountry outsourcing. We need to band together.
Posted by: Bing on August 9, 2004 01:55 PMHugh does not agree with you on this.
To a John B who reacted on another of Edwards posts, "Who is Elga Bartsch", with:
"it would be better if these jobs were outsourced to eastern Europe and German labour was freed to work on something more productive"
He answered:
"This John is undoubtedly true. But here the EU and the US (with it's 'weak' labour market) are in pretty much the same boat. There is little evidence that the work that is being displaced is being re-directed towards higher value activities in anything like sufficient quantities.
Indeed this paper:
http://www.imf.org/external/pubs/cat/longres.cfm?sk=17591.0
published on euro area policies by the IMF on Tuesday seems to suggest that the only consequence in the short-term of increased labour flexibility in the Euro zone has been a substitution of labour for capital, as labour has become relatively cheaper. This means effectively that people are moving down-, and not up-market in terms of work.
We were promised (by among others the economist) that everything in the OECD world would be OK, that a new 'new' sector would emerge where our societies could move on to another value level. We are still waiting.
Meantime what Stephen Roach calls global labour arbitrage means that even relatively higher value work is now being redistributed across the planet. In economic welfare and social justice terms this is undoubtedly to be welcomed. But it does leave the 'old incumbents' with something of a problem.
My feeling is that we are still in a state of 'denial' on all this."
And "Bottom line: the US is living in denial just as much as the EU."
That is sad about Edwards contributions: the titles he uses for his posts do not communicate anything about its contents.
(http://fistfulofeuros.net/scgi-bin/mt-comments.cgi?entry_id=499)
Posted by: Frans Groenendijk on August 9, 2004 02:53 PMAh, when "capitalism" and "communism" collide...
Posted by: El Gringo on August 9, 2004 04:35 PMIn the US, there are endless lawyer jokes. In Germany, jokes end with "Well, the labor laws...."
Posted by: verbal on August 10, 2004 12:11 AM