On top of the rigidity of the labor markets I'd also add the simple fact that moving between countries for work in the EU is still a huge exception rather than the rule, whereas moving within countries is quite common. The Spanish simply aren't going to leave Spain in droves to go work in Germany.
Well I think the rigidity is more of a general problem. Even if the Euro crisis would be solved, the rigid labour markets would still be a huge drag on growth and a problem for public finances. I would put the lack of inter-European migration more into the pot of flaws of the Eurozone. High migration rates would be a valuable counterweight and balancing mechanism, like they are in the US. When you don't have that you are even more dependent on some kinds of transfer payments as counterweights, which of course are even more lacking in the Eurozone...
The explosion of e-lancing doesn't really suggest labour markets are too rigid as a whole. The bigger issue is jobs in general. What when jobs are no longer ubiquitous and a great mechanism for wealth distribution? What happens when we don't need all these workers?
But the idea that we may run out of jobs is silly (at least as long as we don't have vast robot armies). Just walk out of the door and look around you. I'm sure you find a lot of things which could be improved. There IS work, the question is, how we can pay for it. No, I don't think e-lancing is a sign of much. It is a miniscule part of the overall job supply. I'm not even sure Germany is a great example of the rigidity. There are a lot of things I would change but the reforms 10 years ago made a big difference. I know a lot of leftist despise the Hartz 4 reforms but what would be the alternative to a substantial low wage sector? Far more unemployment like we had before? That is not the better alternative at least in my mind.
It isn't silly. Digitisation is destroying millions of white collar jobs which were only recently created in the 90s
So what? Mechanisation destroyed millions of agricultural and industrial jobs as did automatisation. Computers have long been killing white collar jobs, but plenty accountants are still running around. New fields and new jobs will be found, maybe not as well paid as the old ones, maybe even better paid ones, nobody knows. Just look at your household. Washing machine, dishwasher, vaccuum cleaner, modern ovens, running water etc. Productivity skyrocketed compared to 100-150 years and you can still find enough to do. Maybe we will one day run out of jobs but I'm not sure we should just assume that it is already happening. There is no set amount of work we only have to divide among all people. Its a fallacy unions liked to make a couple of decades ago.
I can only comment from a Dutch perspective but over here the very poorest are not paying for the crisis. The rich aren't either. The middle classes are. I'm guessing it's much the same in the rest of Northern Europe. The point I was trying to make is that rich old people aren't the exception. They generally are considerably richer than the young. It's young people we need to worry about at this point. Imagine graduating at a time like this, in Spain for example.
I think you're talking about German issues here. The NL has lower unemployment than Germany, yet we're in recession again, and the Germans are not. The NL does not have a rigid labour market, there are heaps of flex workers and people who temporarily go 'part time unemployed' to save their job and their employer's arse. That's probably because Dutch employment largely relies on small and medium sized business, whereas it's the big corporates who dominate in Germany.
I'm not sure any of this is new. Places like sea ports were digitised ages ago, for examle. If anything you've got more of a chance of getting a job in plumbing than in IT right now. Maybe that's part of the problem. The past two generations have all gone to university getting themselves educated for a managerial job while there's only so many of them about.
Anyway, see where to get YOUR tasty dobbin-burgers... http://www.guardian.co.uk/uk/datablog/interactive/2013/feb/15/europe-trade-horsemeat-map-interactive
You might want to check your facts Nicephoras. The Dutch economy is built on trade, the German economy on manufacturing. Apart from gas, the Dutch barely produce a thing. And who are these Dutch traders? They are mostly small and medium-sized, even to Dutch standards. And to German or American standards, that translates to tiny. Don't take my word for it, do you research. If you're genuinely interested, I'm willing to provide links. The Netherlands is home to plenty of multinationals. In contrast to German-based multinationals, however, they employ only a tiny fraction of their total workforce in the NL itself. Not that any of this matters when it comes to a crisis. As I pointed out, the Dutch traditionally and presently have lower unemployment than the Germans do. Yet the Dutch economy is in a recession again, while the German economy is not. It's interesting to me what we can learn from this. I myself think it says a lot about how people digest a crisis, psychologically. You of course think this is a load of bollix, but people who post here as long as you and I both have, will come to their own conclusions.
Actually, nicephoras is right on this. In 2011, 78.7% of all employees in German were working in the "Mittelstand", which is defined to be small and medium sized companies with less than 500 employees and less than €50 million revenue per year. See here: http://www.ifm-bonn.org/index.php?id=583 I don't think it has much to do with psychology as Germans are among the most pessimistic people out there, so if anything, they should do worse. I would guess that it comes down to the NL still having more flexible labor laws (although Germany has caught up in that regard over the last decade), which reduces the threshold at which point growth translates into jobs.
Wait, wasn't it the US that first introduced massive tariff hikes from where the global economy spiraled down? I seem to remember that when the tariffs were introduced, unemployment was still below 10%. I don't. The fact that there was a recession was inevitable. It didn't need to become as bad as it did however. Although I don't see how there was any recovery as soon as spending picked up. GDP went up as a result, but that's basically a tautology. Unemployment on the other hand stayed above 15% until the US entered WWII. Again, I don't. The question is: What are proper steps? Reducing the hard grip on money supply probably did do the trick eventually. Had the FED provided emergency credits to banks, from the beginning, it wouldn't have had to become a full blown depression. But as I said, a recession was inevitable. To use an image: The economy then (and now) was overstreched...think of it as a rubber band. Back then, they let it snap, when they should have slowly reduced the stretching force. It's not about "deserving" anything. It's about being able to sustain yourself. If you borrow more than you can afford, you'll be bankrupt eventually, no matter what you deserve.
I agree that normally workers would simply be redeployed from one sector to another but this is no normal recession as we keep seeing. If you look at the UK high street right now, at the same time as they are experiencing the toughest trading conditions yet seen, a digital revolution is sweeping through and destroying lots of jobs. So the overall business is declining whilst the digital channel is booming. So when we talk about the end of jobs - we are not talking about the end of McJobs, or that there is nothing to do - we are talking about the scarcity of decent jobs you can actually make a reasonable living off. We can continue to increase productivity with less and less workers. At the same time and thanks to the arrival of decent online collaboration tools - more and more new hires can be virtual. We've seen tremendous growth in the free lance sector in the UK and US. Of course but the issue of the digital age is who wants to pay for it? Contrary to popular belief, key cities in the UK are booming right now - its just the new economy has no real need for the millions of workers who don't live in the South At the same time you have lots of people not fully employed, or earning to little to survive without government assistance. So this brings up back to the key idea. After world war II, it became accepted that everyone would have decent job opportunities, and you could make a decent living for yourself if you worked hard. That idea was certainly never true prior to World War I So what happens if productivity increases no longer need all these workers? How does the social contract then work? After all, the whole point of the technology is that we don't need to work as much - and that is what we are in fact seeing. Europe has loads of infrastructure, enough food etc. It can still maintain lots of people, even though increasingly feck all of us are working.
Germany is starting from a different place as well. It was not so long ago that the UK was mocking unemployment levels in Germany. Now Germany's "shocking unemployment levels" look quite good
Well that's exactly my point. What's Mittelstand to you isn't Middenstand to Dutch standards. There's a vast bulk of Dutch people work for companies who employ less than a 100 or even 50 people. Temporary work has long been tradition in the NL. Randstad is from here. In my job I speak to a lot of Germans. The building and construction industry is thriving in Germany at the moment. In the NL it is in total crisis. What else speaks for the trust people have in an economy if it isn't the willingness to invest in property?
Maybe the definitions differ, however we're not talking about some massive multi-nationals but a multitude of small and medium firms. I dunno...real estate is still a rather conservative investment in Germany, something you do in order to protect yourself from an economic downturn. If people trusted their economy, they'd be buying stocks instead. Also, we now see a lot of the money that went into the European periphery return, so that also plays a role.
That is driven by fundamentals. In Hamburg - one of the places with soaring prices - there is a genuine lack of places to live. Also, people invest in property in Germany because the rental market delivers a solid and decent yield. However the german Landlord is not like the UK buy to let - they are often an institutional owner who has 100s of properties. They don't invest for capital gains - that's a newish idea. Finally - go out east and you can find towns where half the place is empty. I haven't checked recently - but friends of mine bought a 600m2 property for 5K just over 1hr east of berlin. So it certainly isn't thriving everywhere
A number of people I know have made this move in Hamburg because a) rents are spiraling b) interest rates are absurdly low There is a bit of a bubble feel here at the moment. Berlin was also long supposed to get expensive - and that has finally happened IMO. I am reminded that when I was a property lawyer in NZ, we felt that the market was overheated in 1996 - yet the crash did not come till 2008 and in many parts of NZ prices are still going up. It really depends on whether you live where the jobs are.
Yeah, in Germany there's slowly the fear creeping in that a real estate bubble might form. But while the fear seems to be strongest in Berlin, that's probably the place that's still the farthest away, mainly because it's so dirt cheap. My ex-girlfriend moved to Berlin 10 years ago and I couldn't believe how cheap it was to live there. No comparison to other metropolitan areas. Now my sister has recently moved there and while prices have decidedly gone up, it's still nowhere near places like Munich, Stuttgart, Frankfurt, Düsseldorf or Hamburg. I think the idea of real estate as a speculative investment is a rather new one in Germany and as of yet not as far spread as in other places. In the past, it was also a very conservative investment. It was something private individuals invested in so that they would have a place to live in (or alternatively receive rent from) once they retire or maybe some funds who would put part of their capital into secure areas where yields would be low but at least the value wouldn't fluctuate too much, and which would be protected against a potential economic downturn, akin to gold maybe. Only now has it become a speculative investment with interest rates being low and alternatives sparse. That's why we got this immediate fear that a bubble will form when other countries would still lough at that proposition. Having said all that, I think the fear of a bubble may be justified in some specific cases, but probably not yet and as you pointed out, restricted to only a few areas.
You also have to remember that the property market was dormant for a decade or two. Prices probably have a lot of catching up to do before they reach bubble territory. We will see if Germany is more successfull in preventing it than Spain or Ireland, at least we have some recent cautionery tales to listen to. @jitter I just think that your worries are too early yet. Possible alternatives are already being discussed, like a basic income or lower working hours etc. Everybody should be happy about increased productivity it is the only way we could reach something like the Federation's economy. No idea if we even could ever get there. Resource shortages may just prohibit it (just think of all the robots that have to be built and powered for it).
Well, it was nice of benz to show you how wrong you are - Germany is one of the European countries that notably lacks the prevalence of giant enterprises found in places like France and Spain. But, anyway, while you claim Germany makes things, that's true - but most of that is made by small companies and the majority of it is then exported. Germany manufactures to export; that's why it continues to have such a large trade surplus. There are a lot of reasons for the difference in employment and how it relates to recessions. Also, while the German economy is not technically in recession, it has practically stopped growing. It's very dangerous to draw significant conclusions from a difference in half of a percent in growth and small differences in unemployment. I also don't know the differences between labor laws or what the governments have done in terms of stimulus - as far as I recall the Dutch haven't really increased spending significantly which has been the best way to ride out the recession.
No, it wasn't. You have your information completely wrong. The Great Depression in the US resulted from bank runs; it began and ended in different parts of the world at different times. For instance, the 20s was a horrible decade for much of Europe, which shows you how unconnected the US was to Europe. I've actually written papers on this; the level of trade between the US and Europe dropped precipitously after about 1920. Unemployment went down significantly, and GDP going up isn't a tautology when it goes up more than a dollar spent. Are you seriously unfamiliar with the concept of spending multipliers? As for unemployment going down due to WWII.........what was that if not a giant public works program? And given that we are in a liquidity trap, the only way to provide the "stretch" in the rubber band is to spend more. Yes, that's the point. You can't cut rates when they're at zero. That's basically your proof that the economy is operating massively below capacity - when offered borrowing rates of almost 0 in real terms, companies still aren't growing. There's a lack of demand which is leading to this lack of spending, thus the question of who will pick up the slack. In this case, given the zero percent rates, it should be governments. Economies are not people, you can't apply this logic to them. Look at the ratio of debt to GDP for the UK - it was over 200 after the Napoleonic wars; yet that proved not to be a problem. Same for US debt after WWII. That doesn't mean countries should spend randomly with no consequences, but it does mean that "sustaining yourself" isn't a relevant concept - it's mercantilistic.
http://www.sueddeutsche.de/politik/wahlen-in-italien-berlin-warnt-vor-berlusconi-1.1603753 http://deutsche-wirtschafts-nachric...den-italienern-waehlt-monti-nicht-berlusconi/ Why don't these people mind their own business and focus on their own country?? I've never seen Italian politicians meddle with German elections. Not that they're doing Mario Monti any favour....being depicted as Germany's puppet, in Italy, is a sure recipe for defeat. Now I'm forced to vote for Silvio in order to safeguard our sovereignity and freedom...that sucks.
