Good point, but could it be argued that the welfare state is more prodigious in every single European country than it is the US and as such the stabilizers steadying consumption would pull the EU out of recession before the US, notwithstanding the the dependence of the global economy on US consumption. Consumption, for instance a la Kalecki represents the principal macro variable that when it moves up, after we hit the trough, pulls with it all other variables, principally investment public and private. As such, would it not be that the Galbraith aggregation below could have missed: 1) the dynamics of macro variables are different in Europe than it is in the US, that is, because let us say, the underpinnings of consumption are different in view of more state dirigisme in Europe and probably a not so unified fiscal process and even the monetary one given that many countries have been monetising debts at different speeds, and; 2) the homogisation across Europe is not so complete to allow for such 'adding up' cum comparison despite resource mobility, that is inequality/poverty is both relative and absolute, meaning that in Europe regional disparities cannot be fully integrated and compared in view of the short period of integration, which, in turn, leaves far too many qualitative differences unaccounted for. In respect to point 2), there is indeed a high rate of wage equalization (homoginising labour), but the starting point of some was too low to begin with, and the dislocation created by the process itself, i.e. a higher rate of reserve army of labour, makes a stronger point for European capital to depart from.
________________________________ From: michael perelman <[email protected]> To: Progressive Economics <[email protected]> Sent: Sunday, June 7, 2009 12:09:16 AM Subject: [Pen-l] European vs. U.S. Unemployment Explained 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 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
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