[Marxism] European vs. U.S. Unemployment Explained

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

When Jaimie Galbraith is good, he can be very good. Here is an example, 
explaining European unemployment as a result of inequality rather than 
social democracy. After explaining the close association between 
inequality and unemployment, he goes on:


97: "The European economy is no longer a collection of separated 
national systems. Spain, Germany, and France are not independent, 
mutually isolated national economies. There are no barriers to trade or 
capital flow, in fact, no formal barriers to the movement of labor 
throughout Europe. There is now a single currency unit across most of 
the region. The integration of the European economy in practice -- from 
the standpoint of a large multinational corporate employer, for instance 
-- is nearly complete. From every analytical point of view, it is 
necessary to start thinking of Europe as a single unit. It is therefore 
necessary, from a statistical and practical point of view, to measure 
inequality and employment at the European, and not the national, level."

97: "When this is done, the notion of Europe and the United States at 
the opposite ends of an employment-equality spectrum disappears. Pay 
inequality within countries of Europe is relatively low, but 
inequalities between them are very high: much higher than across 
comparable distances in the United States. Adding the two components, 
the inequality within and the inequality between countries, one finds 
that overall inequalities of pay are actually higher in Europe than in 
the United States. Thus, the standard perception of a European/American 
counterpoint is simply incorrect. So far as pay is concerned, Europe now 
is both more unequal and less fully employed than the United States. It 
is, by the same token, less efficient, but not for the reasons usually 
given. Rather, the United States wins the efficiency contest -- not 
because it is less egalitarian but because it is more so than the 
ungainly ensemble of countries that now make up the European Union."

Galbraith, James K. 2008. The Predator State: How Conservatives 
Abandoned the Free Market and Why Liberals Should Too (New York: Free 
Press).

-- 
Michael Perelman
Economics Department
California State University
Chico, CA
95929

530 898 5321
fax 530 898 5901
http://michaelperelman.wordpress.com

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