The Electric Commentary

Monday, August 30, 2004

Tech Central Station is a great read today.

Especially this article on the connection between economic protectionism and apartheid. Poor Lou Dobbs.

And this critique of worker productivity numbers by Tim Worstall:

As [Berkeley professor of economics] Brad DeLong once pointed out to me in an email, you would expect hourly productivity (which the EPI is using) to be higher in Europe than the U.S., because of all the cost-increasing labor market restrictions there. Any business anywhere will avoid hiring workers beyond the point where productivity fails to match costs.

I've often wondered how France manages to have impressive productivity figures. This makes perfect sense:

If you raise to a company the cost of employing people they will employ fewer of them. More importantly, they will only employ those who are more productive than those higher costs. We would then expect to see the less productive workers not employed at all.

What do we in fact see in countries with high social costs associated with employment? Amazingly, high unemployment generally and especially so amongst the untrained young (I hope it isn't too much of a shock to you that those who don't know what they are doing are generally less productive than those who do). The EPI report tries to explain this away by pointing out that there are some European countries which do not have high unemployment rates, yet it fails completely to adjust for the various disability, sickness and make-work training schemes. The UK alone has 3 million people on Disability Benefit, some 5% of the population and while there are obviously people who actually are too ill to work and are worthy of society's support, it really does stretch the imagination to think that not a single one is a work-shy malingerer, or that for some (the benefit is higher than unemployment pay) it is an alternative to unemployment.

Now I know.


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