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November 14, 2006

More on Europe and America

The Century Foundation engages the work/leisure tradeoff:

Between 1970 and 2000, GDP per person rose by 64% in the United States and by 60% in France. In America, this came about because productivity per worker rose by 38% and hours worked per worker rose by 26%. In France, it came about because productivity rose by 83% while hours worked fell by 23%.

I'm actually rather surprised by the paltry vacation time allotted to US workers. Were I a Democratic strategist, I'd make a guarantee of at least two weeks paid and two weeks unpaid vacation time a major policy plank. Given the rate of geographical dispersion, where I, say, live in DC, and my family in Southern California, simply keeping up family ties can easily consume two weeks of vacation a year. On top of that, it would be nice if people got actual, you know, vacations.

As a more general commentary on all this, I think Europe and America both have it half right. Our focus on competition and tolerance of risk are critical to a healthy economy. Their comprehension of the need for security and the importance of leisure are key for a good society. We err in giving competitiveness concerns undue weight, creating situations where, for instance, workers aren't even guaranteed paid time off after childbirth. They err in occasionally seeking security by shackling economic freedom. I'm not sure precisely where the happy medium lies, but it's pretty clearly to our left and their right.

November 14, 2006 | Permalink

Comments

Could you expand on your phrase 'shackling economic freedom'. I've lived in the USA, UK and France and I don't get what you actually mean. It sounds like a nebulous conservative think-tank phrase, to spin union-busting and dismantling worker protection.

Posted by: Mark | Nov 14, 2006 4:22:36 PM

I'm not sure precisely where the happy medium lies, but it's pretty clearly to our left and their right.

Proof? Demonstrate that they don't have it right, or that it doesn't lie even to their left. It's easy to assume that the "real" answer is between two things presented as opposites - but this is faulty logic.

Posted by: Phoenician in a time of Romans | Nov 14, 2006 4:23:55 PM

To expand on that last - if the goal of society is teh happiness of its members, is the amount of "sacrifice of economic growth" in Europe even noticable in terms of human happiness? They are, after all, still rich First World countries.

Posted by: Phoenician in a time of Romans | Nov 14, 2006 4:25:54 PM

The problems in the European model are fairly well-known. Higher unemployment, lower per capita income, and lower economic growth primary among them. Those are, in fact, problems, things we want to avoid. As for how they shackle economic growth in the interests of security, the best example is France, where judges have oversight over internal firings at companies. That may be just (or not), but it's absurdly inefficient. Economic security is better provided, I think, by the state. Welfare policy has also been absurdly generous, at least until the recent round of reforms.

Posted by: Ezra | Nov 14, 2006 4:36:18 PM

Hmmm... You changed from 'shackling economic freedom' to 'shackling economic growth'. They don't seem synonymous to me, but perhaps I'm being picky. And as someone who has been on the end of restructuring in both France and the USA, believe me, having those worker protections is not something to be lightly dismissed.

Posted by: Mark | Nov 14, 2006 4:52:15 PM

Sorry, I actually meant freedom in the comment. Read enough econ papers and it all blurs together. As for the protections, you're right, they shouldn't be lightly dismissed. My read of the evidence is that they do more economic harm than good and that there are better ways to protect workers than forcing companies to keep them. But I hardly think the point is inarguable.

Posted by: Ezra | Nov 14, 2006 4:59:42 PM

Ezra, Ezra, Ezra. This I expected from Fred, but not from you.

1) Employment rates in Europe for prime working age are now close to those in the US, and equivalent if you exclude women in Spain and Italy (PDF).
2) Per capita income is a meaningless statistic in comparing a tournament economy that sports Bill Gates, Warren Buffet and the Walton heirs to others that do not.

That leaves growth and more importantly productivity, which are the real bugbears. No question, there are real problems with the European economic system. They are, I would argue, almost exclusively problems of the right, not the left. The right ever and always seeks economic control. While its rhetoric is that of the free-marketeer, its policies are those of the monopolist and the government contract.

The ideal is not between the two. The ideal recognizes the power of functioning markets and regulates them with as deft and light a hand as possible. This is neither left or right, it is something like an enlightened technocrat with anarcho-libertarian leanings.

Hell yeah, I am talking my book. That doesn't make you right.

Posted by: wcw | Nov 14, 2006 5:07:45 PM

"The problems in the European model are fairly well-known. Higher unemployment, lower per capita income, and lower economic growth primary among them."

well shit, that does it for me. they're pretty well known and everything!!

Look at these awful statistics from Denmark. We're miserable.
http://www.dst.dk/HomeUK/Statistics/Key_indicators/Labour_market/Unemployment.aspx

Posted by: bryan | Nov 14, 2006 5:15:16 PM

This line of thought seems very shakey. For 4 points of GDP growth/person, we should accept the social, and familial and personal insecurity of the US over France? And the productivity growth seems to favor the French.

I'm with the others above, that some hypothetical 'middle way' isn't necessarily the correct course. Half way between liberalism and conservativism (or more radical rightist views) isn't really a solution. But neither is extremeism that can't win the support of the majority of the people to support.

We shouldn't view the EU (or its component countries) as a model to replicate, but we sure can and should use it as a benchmark of the possible alternative(s).

Once one scrapes away the cover arguments in favor of unbridled entrepreneurship on a world-wide basis, one discoveres lots of 'I've got mine' greed - which I have no wish to see continue as so-called rational economic and political philosophy.

How about this deal: Let's pay to have the richest 2% or 5% of the country emigrate and re-nationalize to the country of their choice. Wanna bet they choose the south of France, Northern Italy, Switzerland, Germany, and the Scandanavian countries? And how many will choose to live in the places where the rich literally rule and their is no social equity? (Name your country that fits)

Posted by: JimPortlandOR | Nov 14, 2006 5:55:47 PM

"Employment rates in Europe for prime working age ... and if you exclude ..."

1. What about non-prime working age?
2. What do you say we exclude women (or men, if it works out better that way) from the 2 highest unemployment states in the US? What does that do to the picture?
3. Are those tortured data I hear screaming their confessions?

"Enlightened technocrats" -- oh, joy.

Posted by: ostap | Nov 14, 2006 6:01:08 PM

I'm actually rather surprised by the paltry vacation time allotted to US workers. Were I a Democratic strategist, I'd make a guarantee of at least two weeks paid and two weeks unpaid vacation time a major policy plank.

Two unpaid weeks would not fly with the large number of people who live paycheck to paycheck.

Posted by: Marcus Wellby | Nov 14, 2006 6:04:47 PM

Ostap, any time you want to run the numbers yourself, I shall pay attention to you. 'Til then, you're a whiny mosquito noise in the periphery.

Critique is empty without antithesis.

Posted by: wcw | Nov 14, 2006 6:09:10 PM

I'm not sure precisely where the happy medium lies, but it's pretty clearly to our left and their right.

That's right - Tahiti!

Posted by: craigie | Nov 14, 2006 6:17:51 PM

No question, there are real problems with the European economic system.

Naturally enough - there are problems associated with buying a four bedroom house in the suburbs, but it beats the hell out of a one bedroom apartment on the wrong side of the tracks.

Ezra said "As a more general commentary on all this, I think Europe and America both have it half right. Our focus on competition and tolerance of risk are critical to a healthy economy. Their comprehension of the need for security and the importance of leisure are key for a good society."

In that "a healthy economy" is only useful as an instrument towards "a good society", I'm challenging Ezra to show that Europe's economic problems in not pursuing the American model seriously hamper the goal of "a good society". As far as I can tell, the average (Western)European is happier with his/her day-to-day conditions than the insecure American worker.

Posted by: Phoenician in a time of Romans | Nov 14, 2006 6:45:42 PM

"Two unpaid weeks would not fly with the large number of people who live paycheck to paycheck."

No they wouldn't, but two weeks paid would. I've been at my current job for two years (factory work) and I get 5.5 days of vacation per year with a half-day increase per year of employment. Do you have any idea what I'd do for two weeks of vacation?

Posted by: Dustin | Nov 14, 2006 6:59:11 PM

I've yet to see any evidence you've proffered for that, Phoenician. It certainly doesn't show up on happiness survey. And that their labor market is, depending on who you talk to, only furnishing somewhat more unemployment rather than a lot doesn't mean a point in their favor. Moreover, the data on average income is, unless someone has some contrary numbers, pretty variant.

In any case, it's a weird position to be suddenly on the right of this debate, but I stick to my guns. There are elements of their model we'd do well not to adopt. There are elements of their model that we need to implement. And this conversation that presents a binary "Europe: Yes or no?" is rather beside the point.

Posted by: Ezra | Nov 14, 2006 7:00:26 PM

Sorry -- variant should be stark. The median American makes quite a bit more than the median European.

Posted by: Ezra | Nov 14, 2006 7:02:05 PM

The link says the average income in Europe is 70% what it is here. Some say that's not a fair measure because of the very rich throwing it off, but the high poverty rates here also factor in. Raise your hand if you want to work 30% less and earn 30% less. It would be fine with me, but most people here would probably chose the extra income.

Being in a country where everyone else is also working 30% more than in Europe has its advantages, in that it enables lower tax rates and keeps the country more dominant, if you're into that kind of thing. As China and India come more into their own we'll probably be forgetting all about that idea of extra time off, just to try to keep pace. Who knows what Europe will do.

Critique is empty without antithesis.

Huh? Why not just explain what makes your peculiar choices in what figures to use legitimate?

Posted by: Sanpete | Nov 14, 2006 7:27:20 PM

What metric would you use for quantifying happiness? The French are certainly proud of their quality of life vs Americans.

The median American makes more than the median Frog, but the median American also pays a lot more for housing. What's the median American salary in the context of cost of living? The median American is also working a whole lot more hours than his or her French counterpart. Additionally, French pay has not only a lower median, but also a lower variance. High income French (um, physiciansengineers for example) don't benefit from as wide a gap from the lowest paid French as Americans. The lowest paid fraction of French income earners make more than the lowest paid Americans.

I'm not sure where the other European companies fit between the French model and the American model, but I suspect they are closer to France.

Posted by: J Bean | Nov 14, 2006 7:32:28 PM

Sp, I linked to somebody else's analysis. His choices are his own. I might speculate that Mr. Naker wanted to focus on population that excludes retirees and students. I provided merely a link, true, but its critique provided nothing except the suggestion that the numbers were cooked.

I feel my response was as measured as possible. If I were drunk I'd have called him innumerate. Probably worse. Depends how drunk.

Ezra, surely by now you'd link to or cite the data themselves. What does the median US wage-earner make versus the median Frenchman? What retirement, health care, education and other state-subsidized costs does the former bear that the latter avoids? Wages are only part of the picture, as you of all people should appreciate.

Posted by: wcw | Nov 14, 2006 7:38:47 PM

The one thing I agrre with wcw on is that it's not very fruitful to talk about things like quality of life and economic policies based on general impression- you should really include links to info substantiating your position.

Posted by: akaison | Nov 14, 2006 8:27:37 PM

I don't think we can go for more vacation time until we have universal health care. Too many employers keep employees working 2 or 3 hours below the weekly wage/hours rules specifying when employers must provide health insurance. To push vacation time as a rightful benefit for employees working over X number of hours per week will only kick more people into the uninsured rolls as employers hire more "part-time" workers.

Posted by: Lee Harris | Nov 14, 2006 9:02:31 PM

PS- one of the problems that I do agree in America is a big problem is the associated costs of being in the middle class. The cost of getting the necessary education, the cost of getting healthcare, the cost of housing, the costs that are all the basics that are so expensive now. How can you take any analysis seriously that doesn't look at these things? Its not that people choose to work longer hours. It is that they must work longer hours (at least in my experience so no hard data) to make ends meet. The choice is then not about whether one wants to take a vacation, it is whether one can afford to take a vacation. If one does, it's no longer about keeping up with the Jones, it's about losing one's ability to support oneself altogether.

Posted by: akaison | Nov 14, 2006 9:08:48 PM

Then, in addition to the things Europe is doing and the U.S. isn't that the U.S. should be, the things that Europe is doing and the U.S. isn't that Europe shouldn't be, the things that the U.S is doing and Europe isn't that Europe should be, and the things that the U.S. is doing and Europe isn't that the U.S. shouldn't be, of course, there are things that neither Europe nor the U.S. are doing, but should be, and things that both Europe and the U.S. are doing, but shouldn't be. Of course, in many cases, these things aren't so much matters of policy debate as matters of interest-group based politics, which makes such matters very difficult to resolve (e.g. agricultural policy).

Posted by: Julian Elson | Nov 14, 2006 10:11:41 PM

I work at a large law firm with offices around the world. We're currently looking to lateral-in several attorneys from another firm in a large European capital city and I'm working on the compensation package. Right now the current offer is a 5% pay raise across the board (big whoop) - the ugly downside is that we will then require them to bill on average 400 more hours per year to meet our "international billable" standards - which standards also happen to be over 15% less annual billables than are required of their American counterparts. I'm arguing to my colleagues that the offer is absolutely insulting to the Europeans (the billable requirement increases make the paltry raise actually a substantial pay cut) - my colleagues all seem to have the attitude that the Europeans are nothing but greedy grubby slackers who don't know how to put in an honest day's work.
.

Posted by: Andy | Nov 15, 2006 12:39:36 AM

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