Friday, July 29, 2005

The Worst of Times, The Best of Times

In his July 18th NY Times Op-ed column, retired economist Paul Krugman told us that the good news on the U.S. unemployment front was hiding the truth:

...maybe the figures on unemployment are giving a false signal.

....When the economy is generating an abundance of jobs, economists expect to see strong growth in the payrolls reported by employers and in the number of people who say they have jobs, together with a rise in the length of the average workweek. They also expect to see wage gains well in excess of inflation, as employers compete to attract workers.

In fact, we see none of these things. As Berkeley's J. Bradford DeLong writes on his influential economics blog, "We have four of five indicators telling us that the state of the job market is not that good and only one - the unemployment rate - reading green."

....The answer... is a decline in labor force participation.

But, when Paul The Perpetually Perturbed turns his gaze on France he can put on a happy face:

...a head-to-head comparison between the economies of the United States and Europe - France, in particular - shows that the big difference is in priorities, not performance. We're talking about two highly productive societies that have made a different tradeoff between work and family time. And there's a lot to be said for the French choice.

....It's true that France's G.D.P. per person is well below that of the United States. But that's because French workers spend more time with their families.

O.K., I'm oversimplifying a bit. There are several reasons why the French put in fewer hours of work per capita than we do. One is that some of the French would like to work, but can't: France's unemployment rate, which tends to run about four percentage points higher than the U.S. rate, is a real problem. Another is that many French citizens retire early. But the main story is that full-time French workers work shorter weeks and take more vacations than full-time American workers.

The point is that to the extent that the French have less income than we do, it's mainly a matter of choice.

Yes, and the choice is one imposed by the French government on the French people. Not one freely chosen as it is in America. Which is the real reason for his rosat scenario.

However, as with almost every Krugman column, we have an uncomfortable truth lost on Paul:

The French family, without question, has lower disposable income. This translates into lower personal consumption: a smaller car, a smaller house, less eating out.

But there are compensations for this lower level of consumption. Because French schools are good across the country, the French family doesn't have to worry as much about getting its children into a good school district.

Which is because the French have, effectively, school choice, that is denied Americans for reasons of strict separation of church and state (aka, liberal ideology). But, what good are these schools if an education in one can't get a person a job, thanks to other choices made for the French people by their government?

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