Wednesday, October 28, 2009

Dean Baker is Shrill!

by Tom Walker

Dean Baker wrote:
Okay, I'm not on vacation, but this is a BTP flashback. My original write-up of this NYT news article was way too positive. This article was essentially a diatribe against Germany's welfare state. To make its case, it turned an incredible success story -- Germany's relatively low unemployment rate -- into a failure.
It is obvious that Dean Baker is on a mission -- the one policy that resolves all social ills. As such, he cannot listen to reason. Fine. Good luck, Dean. Work week reduction (or "work sharing") has never, anywhere, eliminated involuntary unemployment and underemployment; indeed, it has never had a significant effect. These schemes have not increased employment... This WILL NOT create many more jobs. If Dean's trying to engage in a dialogue with the New York Times, it might help if the tone of his blog entry was somewhat less snarky. Perhaps snark attracts more internet traffic, but it doesn't encourage dialogue.
The basic deal is that Germany adopted an explicit policy of encouraging employers to shorten work hours rather than lay off workers. The government allows unemployment benefits to be used to pay workers to cover most of the loss in wages due to the shorter workweek.

As a result, Germany's unemployment rate has barely changed in the downturn. Its unemployment rate at present is 7.7 percent. This is down from 7.8 percent earlier in the year. Germany's unemployment rate in 2007 was 8.4 percent, 0.7 percentage points higher than the current level.


Joerg said...

What the Germans do is de facto a state-financed measure. There is no tax credit involved - it's just plain state spending (o.k., formally it's social insurance, but that's a difference without a difference). And it sure as hell works only as long as that spending is kept up.

You said that you are opposed to all this big-government stuff. In fact, you were building a barricade, waving a banner and shouting the slogan "Syndicalists, anarchists. libertarians and Austrians of the world, unite against your common oppressor, the big Leviathan and the parasitic tribe of opportunists feeding off of it: the academic economists of all stripes! They talk welfare, we answer: fare thee well!"
I'd be far more interested in learning from you why unions are not capable of making successful demands for, e.g., longer vacations in the U.S.

Jack said...

Walker, Now you've confused me to no end. I was under the impression that you are campaigning for fewer hours of individual work time as a means to more work for others. Now you say the Germans have it wrong. Is that only because their government is in some way funding the reduction of individual hours of work? I don't disagree with the basic contention of less work time for all leading to more work for others, but doesn't that mean that there will be an extra cost? I've always understood you to mean that the goal is less work, but equal pay, for the shorter hours that is. Have I been misunderstanding the entire argument?

Also, here is a real life example of more work for a few, to their financial advantage, but less work for others (who could have worked some parts of the 80 hour weeks described.)

"With Contract’s Help, Carnegie Crew Draws Big Pay" NY Times, last night and this morning.

Anonymous said...

Oh for the love of god and cute babies does anyone get god damned irony any more? said...


You have me confused here. Where is the irony? In the link to Randall Wray? Actually, Wray has been responding in a very reasonable way to Sandwichman over on his own blog, now that I have looked. Does not correspond with Sandwichman's strong complaints about his conduct at all.

As I said before here, my take on the Hayden study is that there might have been a reduction in France of the unemployment rate of about 1% due to the work rules laws of 1998 and 2000, not sure. I think that would be less than the 350,000 number that S-man claims Hayden claims for it, but not substantially less so.

Regarding the German case, they seem to have a mixed policy of encouraging work sharing and increased public funding support. It is true that Germany has been hit less hard by this recession than many other countries.