Paul Krugman writes about how Germany is hasn't seen as high an increase in unemployment as the US has and that this is due to the laws Germany has to support employment and the subsidies to employers who reduce the hours of their workers rather than lay them off.
He goes on to suggest that the government cannot use monetary policy to get us out of the recession, and for 90% we STILL are in a recession, and the government leadership may not be willing to borrow enough to counter the demand short fall that resulted from the recession. He suggests creating a new W.P.A. to hire people and reduce unemployment (worked for one of my grandfathers, who helped build the Quabbin reservoir). He argues against the standard objections:
But these aren’t normal times. Right now, workers who lose their
jobs aren’t moving to the jobs of the future; they’re entering the
ranks of the unemployed and staying there. Long-term unemployment is
already at its highest levels since the 1930s, and it’s still on the
And long-term unemployment inflicts long-term damage.
Workers who have been out of a job for too long often find it hard to
get back into the labor market even when conditions improve. And there
are hidden costs, too — not least for children, who suffer physically
and emotionally when their parents spend months or years unemployed.
Krugman does Germany an injustice by failing to contest US prejudices
about European (particularly German) labor practices. If German labor
practices are so terrible, then how was Germany an export powerhouse,
able to punch above its weight versus Japan and China, while the US,
with our supposedly great advantage of more flexible (and therefore
cheaper) labor, has run chronic and large current account deficits? And
why is Germany a hotbed of successful entrepreneurial companies, its
famed Mittelstand? If Germany was such a terrible place to do business,
wouldn’t they have hollowed out manufacturing just as the US has done?
Might it be that there are unrecognized pluses of not being able to
fire workers at will, that the company and the employees recognize that
they are in the same boat, and the company has more reason to invest in
its employees (ignore the US nonsense “employees are our asset,”
another line from the corporate Ministry of Truth).
A different example. A US colleague was sent to Paris to turn around a
medical database business (spanning 11 timezones). She succeeded. Now
American managers don’t know how to turn around businesses without
firing people, which was not an option for her. I submit that no one is
willing to consider that the vaunted US labor market flexibility has
produced lower skilled managers, one who resort to the simple expedient
of expanding or contracting the workforce (which is actually pretty
disruptive and results in the loss of skills and know-how) rather than
learning how to manage a business with more foresight and in a more
organic fashion because the business is defined to a large degree
around its employees.
Both are useful articles and the discussion on the Naked Capitalism article is very interesting.
One last thing, the "employees are our asset" nonsense always reminds me of this Utah Philips story (called "Natural Resources") which appears the album "The Past Didn't Go Anywhere" that he did with Ani DeFranco:
was invited to the State Young Writers' Conference out at Cheney, which
was at Eastern Washington university. And I didn't want to embarrass my
son, you know, and I was gonna behave myself cause I had to live there
then – it was a chore. But I got on the stage – it was an enormous
auditorium; there were twenty-seven hundred young faces out there, none
of them with any prospects anybody could detect – and off to the side
of the stage was the suit-and-tie crowd of people from the school
district and the principals, and the, the main speaker following me was
from the Chamber of Commerce.
Well something inside of me snapped.
And I got to the microphone, and I looked out over that multitude of faces and I said something to the effect of:
"You're about to be told one more time that you're America's most valuable natural resource. Have you seen what they do to valuable natural resources? Have you seen them strip mine? Have you seen a clear-cut in a forest? Have
you seen a polluted river? Don't ever let them call you a valuable
natural resource! They're gonna strip mine your soul! They're gonna
clear-cut your best thoughts for the sake of profit, unless you learn
to resist, cause the profit system follows the path of least
resistance, and following the path of least resistance is what makes
the river crooked! Hmph!"
Well there was great gnashing of teeth
and rending of garments – mine. I was borne to the door, screaming
epithets over my shoulder, something to the effect of: "Make a break
for it, kids!" "Flee to the wilderness!" The one within, if you can
There is a bit more. The whole album as well as the others he did are most worth it. He is still sorely missed.