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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