When we started down the path of globalization it was to spead our way of life. Now it looks like the writer wants us to look like the Chinese. Slave labor would be very efficient.
14
"... A jug of Wine, a loaf of Bread and, 'Guaranteed freedom from want'..."
This is something the majority of Europeans continue to enjoy, regardless of their individual or collective social-economic plight--
... We in America derisively call it, "Socialism", which makes us overlook what it really adds up to for Europeans...
"Enough for a family to eat, a roof to sleep under, a bit of fun [my caption]", and an unrelenting grip on perhaps the greatest of Roosevelt's four freedoms, which oddly seems to be eluding many families in America.
"... All guaranteed by lavish government spending, that provides workers with an umbrella of security unmatched at any time in history..." [my caption]
Admittedly, there is as always a downside:
"... Archaic restrictions on hiring and firing workers, flawed energy policies and kilometers of red tape that can make even starting a business difficult — just to name a few — have combined to damage the Continent’s ability to compete in increasingly global markets..." [quoted, above] As well as ballooning debts, as in Greece for example.
In other words, "national impoverishment" in an aggregate sense, in exchange for the priceless opportunity each citizen now has to engage in at least, "a minimal pursuit of his or her happiness":
... A promise never made good on to Americans...
Maybe Europeans have veered a bit to far in terms of providing for individual needs. But it's obvious that America has veered much to far in the other direction.
This is something the majority of Europeans continue to enjoy, regardless of their individual or collective social-economic plight--
... We in America derisively call it, "Socialism", which makes us overlook what it really adds up to for Europeans...
"Enough for a family to eat, a roof to sleep under, a bit of fun [my caption]", and an unrelenting grip on perhaps the greatest of Roosevelt's four freedoms, which oddly seems to be eluding many families in America.
"... All guaranteed by lavish government spending, that provides workers with an umbrella of security unmatched at any time in history..." [my caption]
Admittedly, there is as always a downside:
"... Archaic restrictions on hiring and firing workers, flawed energy policies and kilometers of red tape that can make even starting a business difficult — just to name a few — have combined to damage the Continent’s ability to compete in increasingly global markets..." [quoted, above] As well as ballooning debts, as in Greece for example.
In other words, "national impoverishment" in an aggregate sense, in exchange for the priceless opportunity each citizen now has to engage in at least, "a minimal pursuit of his or her happiness":
... A promise never made good on to Americans...
Maybe Europeans have veered a bit to far in terms of providing for individual needs. But it's obvious that America has veered much to far in the other direction.
12
Golly - the growth in the US GDP is impressive. 'Tis a pity that virtually none of that gain has shown up in wages. Oh right - apparently that is why the US GDP has soared. The income inequality has "soared" in the US while on the continent the gap "between the haves and have nots has widened only modestly". Them business killing Europeans need more inequality. And less job security. A fearful worker is a productive worker.
14
Mr. Rattner:
The truth of it all is in your stating that "Europe needs to become more competitive in global markets". Then everything economic can be driven entirely by forces beyond their control. Why is it smart to keep putting all the eggs in one basket. You would fire your wealth manager if he didn't pursue diversification to protect your money, wouldn't you?
Germany's stance has hurt the its partners, but, protected them from being victimized by what you are proposing. They are very fond of controlling their own destiny in Germany. They have firewalled their economy. Good for Germany,bad for the rest of the Euro crowd.
In the end, it is the multi-national corporations you are schilling for here. I don't think that will help anyone in the long run. Is another "free trade
agreement" looming over the horizon?
The truth of it all is in your stating that "Europe needs to become more competitive in global markets". Then everything economic can be driven entirely by forces beyond their control. Why is it smart to keep putting all the eggs in one basket. You would fire your wealth manager if he didn't pursue diversification to protect your money, wouldn't you?
Germany's stance has hurt the its partners, but, protected them from being victimized by what you are proposing. They are very fond of controlling their own destiny in Germany. They have firewalled their economy. Good for Germany,bad for the rest of the Euro crowd.
In the end, it is the multi-national corporations you are schilling for here. I don't think that will help anyone in the long run. Is another "free trade
agreement" looming over the horizon?
7
Germany loses competitively by shutting down its nuclear plants? Maybe, but they don't have Chernobyls, Fukushimas or Three Mile Islands to worry about. Not to mention no solution at hand for disposing of spent fuel rods.
U.S. GDP exceeding Europe's? Of course. All accountable to population increase and probably faulty exchange computations.
Europe, at least Western Europe, doesn't have the obscene income and wealth inequalities we do. Europe's biggest problem is gentrification for which no solution is obvious. The U.S. is in this regard just plain lucky, having plenty of space to accommodate an inreasing population.
According to TransparencyInternational, the U.S. is significantly more corrupt than any Wester European country north of the Alps. Which accounts for obscene inequalities, see above.
This article is absurd.
U.S. GDP exceeding Europe's? Of course. All accountable to population increase and probably faulty exchange computations.
Europe, at least Western Europe, doesn't have the obscene income and wealth inequalities we do. Europe's biggest problem is gentrification for which no solution is obvious. The U.S. is in this regard just plain lucky, having plenty of space to accommodate an inreasing population.
According to TransparencyInternational, the U.S. is significantly more corrupt than any Wester European country north of the Alps. Which accounts for obscene inequalities, see above.
This article is absurd.
12
Not so long ago I met a young American Baritone in the West Side Copy Center. He was here for a stint at Lincoln Center singing leading roles. I asked him what the difference between the US and Europe was for him personally. He said, with no work here, Europe was heaven and America was hell. Since that time, the NYCity Opera where he was debuting, has collapsed and the fine singers of Lincoln Center are now singing for peanuts in the tiny opera companies of the city. Why would any worker want what Rattner has to offer? National Identity and culture only for the very wealthy and Drone worker contracts for the rest. Sounds like a dysfunctional bee hive except our workers are no less intelligent than the people who have made the meaning of their lives the hording of money. Sounds like the Queen and her court.
11
Oh, well, this is only one man's very biased opinion writing about the 1%. His facts are hand picked and not at all balanced. To quote the rich businessmen of Europe (which I doubt) "Enough is enough". As long as you stay on Park Avenue and Wall Street but wander off that path and you see the real America. It's not nice. Why I never heard wealthy businessman crying "enough is enough" during the fifties when they paid a fair share of their taxes the whole country lived a great deal better. This man is pushing plutocracy which is what we have now. The spoils go only to the rich. Does he mention this? Of course not. Does he count the hard labor of the poor? No of course not because our recovery was only for the uber rich.
6
I have never felt so American as when I went through the nearly 2-year process of opening a business in France! The number of delays and errors causing more delays was mind-boggling. The legal, social security and tax choices one must make along the way are labyrinthine and no one can actually tell you what the true differences between taking one road vs. another will be, not even the government offices themselves!
I am not at all a fan of "keep the top tax brackets low" and "let companies do whatever they want to hire/fire workers at will," but something truly has to give with the administrative rigamarole here or this country will be a luxury veneer over a hollow skeleton for decades to come.
I am not at all a fan of "keep the top tax brackets low" and "let companies do whatever they want to hire/fire workers at will," but something truly has to give with the administrative rigamarole here or this country will be a luxury veneer over a hollow skeleton for decades to come.
10
Commenters here seem hell bent on criticizing Rattner for proposing efficiency in EU economies. So do you think it's good for a country to have tons of red tape and bureaucracy? Do you think it's good for an economy if it takes a year or more to get through the administrative process of starting a small business? Do you think it's good for the country if it is impossible to lay off employees? Economies don't grow through the hard work of blue collar workers. They only grow through innovation, entrepreneurship, risk-taking, and constant disruption. Is wealth and wealth inequality such an evil thing that you're willing to accept zero growth, and therefore in the long-run be poor? I guess some folks would rather be collectively poor (vs the rest of the world) than have a dynamic economy that grows.
8
Rattner seems to be making an argument for serfdom. What Europe needs is cheaper labor, one of the few areas America seems to be slightly ahead of Europe.
11
"Making business difficult" is a mantra that I am sick of hearing, and should be on the banned list of pointless phrases. Regulations written to stop business for abusing its workers, polluting the landscape, or advantage of consumers or competitors, are not bad regulations. Enforcement may be bad. The strictures may be harsh. Business may not like the rules under which they must work, but those rules don't make business difficult. The simply set out the rules of the road. Just a speed laws and signage control the flow of traffic on our highways, laws written to control the actions of business are meant to make the commercial world understandable to all competitors. Business needs to learn to work in a democracy without trying to run the bank. That is what I think.
7
Most of the problems in most of Europe are a result of applying a certain Mr. D'Hont's electoral system.
Well it sounds like the Europeans have the opposite problem we do: their wages rise while productivity stagnates, while our wages fall while productivity grows. I'd rather have their problem, to be honest.
10
The fact that the Euro-19 area as a whole racks up 35-40 billion euros of current account surpluses per month has been conveniently left out of this "analysis". And it is not just Germany, in 2014, Spain, Italy, France were all in surplus, 15 out of 19 countries in total. If the trend continues, and it should, the euro-19 area is extremely likely to close 2015 with a current account surplus of greater than 400 billion Euros, possibly even greater than 500 billion. You don't get these numbers with "uncompetitive" economies.
5
It is not either or; they need to take bits and pieces of the right things: structural reforms, fiscal stimuli, debt restructurings, monetary loosening. If for nothing but that it is "political economy", not merely "economics", having some meat makes it easier to eat the broccoli.
Unfortunately it does not seem like they have the political structures or the vision to get them across the chasm.
Unfortunately it does not seem like they have the political structures or the vision to get them across the chasm.
1
First thing when looking at anything written is who wrote it? Maybe they have a vested interest in the facts they have, use and misuse. The answer is freely given: Steven Rattner, a contributing opinion writer, is a Wall Street financier. And wall Street has always been known for its love of all Americans.
It doesn't take much after that to see his conclusions to make things nice for his constituency are: "Europe needs to become more competitive ..... That can be achieved only by a variety of policy changes, such as keeping top tax rates at sensible levels and regulatory reforms that would give companies more freedom to manage their businesses as they see fit, including, when necessary, closing plants and reducing head counts. That is the only viable path to sustainable growth and, ultimately, more jobs."
We can bet those solutions work and have the full support of everyone. We need to do unto Wall Street what it wants to do to others.
The key terms are 'sensible top tax rates" and 'regulatory reforms' so companies can manage their businesses 'as they see fit''. The one most workers would surely agree with 'closing plants and reducing head counts.'
The answer to Europe's problems is to let the ruling class rule and let the working class suffer. Why should ISIS have a monopoly on reducing head counts?
Why would anyone disagree with that? Steven on Wall Street will never have to do without. Yeh Steven! He has the plan.
It doesn't take much after that to see his conclusions to make things nice for his constituency are: "Europe needs to become more competitive ..... That can be achieved only by a variety of policy changes, such as keeping top tax rates at sensible levels and regulatory reforms that would give companies more freedom to manage their businesses as they see fit, including, when necessary, closing plants and reducing head counts. That is the only viable path to sustainable growth and, ultimately, more jobs."
We can bet those solutions work and have the full support of everyone. We need to do unto Wall Street what it wants to do to others.
The key terms are 'sensible top tax rates" and 'regulatory reforms' so companies can manage their businesses 'as they see fit''. The one most workers would surely agree with 'closing plants and reducing head counts.'
The answer to Europe's problems is to let the ruling class rule and let the working class suffer. Why should ISIS have a monopoly on reducing head counts?
Why would anyone disagree with that? Steven on Wall Street will never have to do without. Yeh Steven! He has the plan.
6
A BA from Brown in Economics 40 years ago, and he became rich. What are his qualifications again to make such broad, obvious "one percenter" statements when he's just spouting the same old tired lines of the privileged?
8
This article offers the assumption that all countries are manufacturers and that the optimum state of affairs is maximizing industrial productivity by reducing headcounts, repressing wages along with the cost of other industrial inputs such as credit ... to run bare-bones junk-making operations 24 hours a day. What is being manufactured isn't mentioned nor is context: China, Taiwan, Korea and Mexico (among others) are already competing against each other to manufacture cheap goods as 'competitively' as possible = race to the bottom. Ratner seems to suggest that Greece, Italy and other Western countries join that race.
What a country like Greece or Portugal would manufacture that would make a dent on the China trade is hard to say. Who would buy these goods and with what is not asked.
US GDP is high compared to other countries because of increased financialization of the economy and the dominion of Wall Street and its dollar carry trades. The US is the World's credit provider, what it refuses to provide is repayment, low-wage factor workers competing against each other worldwide are unable to repay.
The craft workshop model serving localized markets using little or no credit is the way forward. There would be increased demand for skilled workers and higher quality, more unique goods. Industrial model is too credit/bank dependent and the quality of goods is generally poor. There is too much resource waste, this leads to real costs of inputs relentlessly increasing.
What a country like Greece or Portugal would manufacture that would make a dent on the China trade is hard to say. Who would buy these goods and with what is not asked.
US GDP is high compared to other countries because of increased financialization of the economy and the dominion of Wall Street and its dollar carry trades. The US is the World's credit provider, what it refuses to provide is repayment, low-wage factor workers competing against each other worldwide are unable to repay.
The craft workshop model serving localized markets using little or no credit is the way forward. There would be increased demand for skilled workers and higher quality, more unique goods. Industrial model is too credit/bank dependent and the quality of goods is generally poor. There is too much resource waste, this leads to real costs of inputs relentlessly increasing.
3
What I want to know is how did this get printed in the NYT? The information is far too logical, relies are far too many actual statistics, etc.
I am sure the progressives here will start talking about things like 'fairness', social spending not increasing fast enough, etc....
But the reality is that the great social give away model is a failed exercise. Global competition is the reality we all face now. Heck, even Germany now understands that energy is an important input and jamming the country with too many renewable mandates hurts the economy and costs jobs. This editorial is spot on imo.
I am sure the progressives here will start talking about things like 'fairness', social spending not increasing fast enough, etc....
But the reality is that the great social give away model is a failed exercise. Global competition is the reality we all face now. Heck, even Germany now understands that energy is an important input and jamming the country with too many renewable mandates hurts the economy and costs jobs. This editorial is spot on imo.
1
Regarding you reference to Germany: you are posting totally false. Germany is still committed to a renewable energy paths, the throwback was due to the Fukushima disaster and the rapid shutdown of nuclear power plants, thus a temporary need to maintain fossil fuel power. That shutdown might have been a mistake. Still, no doubt on the move to a renewable future. Current rate for renewable electrical power is 30 %.
The German unemployment rate is now at a 30 year low. 4.8 %.
So that's facts, your 'statistics', if you want so.
The German unemployment rate is now at a 30 year low. 4.8 %.
So that's facts, your 'statistics', if you want so.
6
It is said not to judge a book by its cover, but Rattner shows that once a in a while you can.
He is a Wall Street financier who sources his data from Bloomberg in order to prove that Europeans need more deregulation. The question is who is Rattner writing for, the farmer or the banker? Should the working class stand pat as deregulation removes any protections they might have so that the CEO's pay can balloon while theirs stagnates? Europe, Greece in particular, seems to be asking hard questions that strike to the heart of capitalism: is it a rising tide that lifts all ships or ladder just for the select few?
He is a Wall Street financier who sources his data from Bloomberg in order to prove that Europeans need more deregulation. The question is who is Rattner writing for, the farmer or the banker? Should the working class stand pat as deregulation removes any protections they might have so that the CEO's pay can balloon while theirs stagnates? Europe, Greece in particular, seems to be asking hard questions that strike to the heart of capitalism: is it a rising tide that lifts all ships or ladder just for the select few?
8
This piece blanked completely on Mr. Hollande's fugue.
Hollande adopted (on 31 December, 2013) a set of measures (Pacte de responsabilité et de solidarité) proposed by a business alliance (MEDEF) which were backed by an unsecured promise by MEDEF of an increase in employment by 300,000 in five years if the measures were adopted. This was a startling alliance with discredited "supply-side" proposals from businessmen by the leader of the Socialist Party.
Hollande's arrival in office was due more to Sarkozy's failure to meet a country-wide acknowledgement off a need to change, than a wave of leftist intentions. Sarkozy turned out to have a superficial understanding of the "liberal" program he had proposed, and spent much of his primary energy in making sure his image was everywhere in the forefront.
Hollande adopted (on 31 December, 2013) a set of measures (Pacte de responsabilité et de solidarité) proposed by a business alliance (MEDEF) which were backed by an unsecured promise by MEDEF of an increase in employment by 300,000 in five years if the measures were adopted. This was a startling alliance with discredited "supply-side" proposals from businessmen by the leader of the Socialist Party.
Hollande's arrival in office was due more to Sarkozy's failure to meet a country-wide acknowledgement off a need to change, than a wave of leftist intentions. Sarkozy turned out to have a superficial understanding of the "liberal" program he had proposed, and spent much of his primary energy in making sure his image was everywhere in the forefront.
2
Yes, Steve, it would be crazy for any country to do anything about climate change. Those silly Germans. Thanks for being the grown up.
4
Isn't it interesting how he derides Germany's decisions on nuclear power? He seems to have no respect for the idea that different facts might suggest different courses of action.
For example, in the vast landmass of the US, Mr. Rattner might feel that the risk of a Fukushima or Chernobyl style nuclear accident is acceptable for the economic benefit he perceives. But 82 million Germans, crowded together into an area slightly bigger then New Mexico might reasonably come to a different conclusion for their own country.
Does that really make them nonsensical?
For example, in the vast landmass of the US, Mr. Rattner might feel that the risk of a Fukushima or Chernobyl style nuclear accident is acceptable for the economic benefit he perceives. But 82 million Germans, crowded together into an area slightly bigger then New Mexico might reasonably come to a different conclusion for their own country.
Does that really make them nonsensical?
5
You should talk to someone who understands science before making incorrect remarks. Nuclear power generation has the same net GHG emissions as solar or wind power (i.e., almost none). The downside, as always, is that it creates radioactive waste. But if your goal is to tackle climate change, it is one of the best alternatives to fossil fuels.
1
Is he serious? which is the model economy Rattner is referring to, the US? If progress means wealth accumulation for the 1% and full time employed needs state support to meet end of the day, no thanks!
12
Spot on!
3
At last we have a NYT op-ed that recognizes the origin of the european austerity policy and that breaking age-old bad habits of corruption and inefficient public administration is necessary before any expansionary policy makes sense for those funding the expansion. Something for Krugman to consider.
1
Another oligarch apologist and excuse maker.
People could afford things that made businesses grow and prosper, before globalization and rigged financial systems to squeeze labor were invented by this class!
People could afford things that made businesses grow and prosper, before globalization and rigged financial systems to squeeze labor were invented by this class!
4
Rattner is correct. As an example, this story, from the NY Times nonetheless, shows how anti-business Greece is:
http://www.nytimes.com/2012/03/19/world/europe/in-greece-business-rules-...
Want to start a food-related business? First, get your chest X-Ray and stool sample, and hand it to the government regulator!...or bribe him. No wonder there is so much corruption in these red-tape-ridden economies.
http://www.nytimes.com/2012/03/19/world/europe/in-greece-business-rules-...
Want to start a food-related business? First, get your chest X-Ray and stool sample, and hand it to the government regulator!...or bribe him. No wonder there is so much corruption in these red-tape-ridden economies.
1
Extrapolating broad European business conditions from Greek horror stories is like extrapolating US living standards from appalachia. Very misleading and intellectually dishonest.
7
Europe is old, crowded, and people have had to learn to live with one another because there really are severe limits to relocating on that part of the world. This means that in order for anything to work everybody has to be assured of the basics of life regardless of overall economic conditions or the social unrest that results could be catastrophic. In the United States, people can still relocate if they find life where they live too challenging, and that makes all the difference when it comes to things like labor and business policies.
I assume he had a good education, possibly even and entitled one, but he doesn't seem to understand economics. He does understand extracting wealth for himself and his friends.
9
Being able to fire people is apparently a fetish of Mr. Rattner's. And why use the term "fire" anyway? My direct experience of working in the EU brought me into immediate contact with the idea that labour forces - organized no less! - over there take profound exception to gratuitous mass layoffs. They see this peculiarly American abomination as a threat to an essential counter-weight that needs to be sustained to make collective bargaining effective, and not some notion that it impedes business.
Why won't Rattner look to Germany as his model for a well-ordered finely-balanced business/labour relationship?
Just because American capitalists have grown its leverage to the point that it can treat its labour force like a rag doll is no point of comparison from which to start arguing for chopping down hard-earned workers' rights - unless you wish to use the American model to SUPPORT a spirited defence of labour.
Lastly, when precisely did the "simplistic debate" about macroeconomics "return to the forefront" in Europe. Up until now, as Paul Krugman has gone to great lengths to chronicle, it has been confined to an echo chamber monopolized by troika austerity hawks. From all indicators since, their ideas were doomed from the beginning and continue to fail their constituencies in ways that defy enlightenment. If the debate is indeed turning away from austerity then this doesn't mark a "return" but a distinct shift in thinking among Europe's aristo-blockheads.
Why won't Rattner look to Germany as his model for a well-ordered finely-balanced business/labour relationship?
Just because American capitalists have grown its leverage to the point that it can treat its labour force like a rag doll is no point of comparison from which to start arguing for chopping down hard-earned workers' rights - unless you wish to use the American model to SUPPORT a spirited defence of labour.
Lastly, when precisely did the "simplistic debate" about macroeconomics "return to the forefront" in Europe. Up until now, as Paul Krugman has gone to great lengths to chronicle, it has been confined to an echo chamber monopolized by troika austerity hawks. From all indicators since, their ideas were doomed from the beginning and continue to fail their constituencies in ways that defy enlightenment. If the debate is indeed turning away from austerity then this doesn't mark a "return" but a distinct shift in thinking among Europe's aristo-blockheads.
7
There is a huge difference between old America and new America.
It used to be that the parents sacrificed so their kids could have better future.
Now the parents sacrifice the future of their kids so we could have it easier and better.
Of course, to pacify our minds, the politicians from both parties came up with a sleazy scheme to justify such behavior – running the chronic budget deficits to spur the economy...
Allegedly, we are doing that for them, our little precious kids...
It used to be that the parents sacrificed so their kids could have better future.
Now the parents sacrifice the future of their kids so we could have it easier and better.
Of course, to pacify our minds, the politicians from both parties came up with a sleazy scheme to justify such behavior – running the chronic budget deficits to spur the economy...
Allegedly, we are doing that for them, our little precious kids...
My main quibble with the piece seems to be that Rattner is advocating making Europe more like the rest of the world, without mentioning how deplorable workers in the rest of the world are treated. Is it good that wages are going up in France while productivity has stagnated? Maybe not. But it's far worse that productivity has shot up in the U.S. while wages have stagnated or decreased!
And the argument that wealth inequality hasn't widened as much during the recession as it did in the U.S. does not mean inequality isn't a cause of the economic problems. In the days of supposed boom, people borrowed and lived off of easy money. Systemic and large inequality might have been overlooked in that time, but when the crunch hits and credit dries up, that inequality might be killing demand.
And the argument that wealth inequality hasn't widened as much during the recession as it did in the U.S. does not mean inequality isn't a cause of the economic problems. In the days of supposed boom, people borrowed and lived off of easy money. Systemic and large inequality might have been overlooked in that time, but when the crunch hits and credit dries up, that inequality might be killing demand.
7
Thanks to the Republicans and the Democrats, it’s so easy to be a great parent here in America. You just have to slash your own taxes, thus spurring up the economy and making it easier for the future generations.
Do you know that an ancient Russian tsar had the same economic policy? He was wasting the taxes and national treasury as if there was no tomorrow in order to revive their economy.
Did it work in the long term for Kremlin?
Of course! Once the tsar emptied the national treasury to the very bottom, he sold Alaska to the Americans to solve the problems.
It’s stunning that democratically elected government in America has the same mind set as an ancient Russian Emperor. How are we going to recuperate the dozens trillion dollars wasted on paying for the chronic trade deficits (about five hundred billion dollars yearly)?
We are just going to sell the US real estate and American companies to the foreigners...
Do you know that an ancient Russian tsar had the same economic policy? He was wasting the taxes and national treasury as if there was no tomorrow in order to revive their economy.
Did it work in the long term for Kremlin?
Of course! Once the tsar emptied the national treasury to the very bottom, he sold Alaska to the Americans to solve the problems.
It’s stunning that democratically elected government in America has the same mind set as an ancient Russian Emperor. How are we going to recuperate the dozens trillion dollars wasted on paying for the chronic trade deficits (about five hundred billion dollars yearly)?
We are just going to sell the US real estate and American companies to the foreigners...
1
Do the leftist commentators here actually think the European model is working? Massive unemployment, stagnation, and impossible barriers in starting a business - all to protect entrenched political interests, not the masses. This hurts not only the rich but a middle class that is trying to get ahead. There is equality - equality of misery - that has existed long before "austerity" policies. My friends in Southern Europe have been unable to find a good job or start a business for years and it has little to do with the Euro or "austerity."
1
"My friends in Southern Europe have been unable to find a good job or start a business for years..."
And yet my friends in Northern Europe don't have these problems at all. You make a great mistake when you generalize about "the European model" based on the challenges being faced by its weakest performers. Does the "American model" look appealing when we break out just its weakest demographics or regions?
Also, it is a mistake to be too declarative about a "European model," yes there is such a thing, but it is a broad church and the arrangements and details can vary hugely. (In some sense, this is what a lot of the current debate in Europe is about.) Greece is not Norway as Germany is not Italy - but all of them follow "the European model" broadly speaking. The devil is in the details.
And yet my friends in Northern Europe don't have these problems at all. You make a great mistake when you generalize about "the European model" based on the challenges being faced by its weakest performers. Does the "American model" look appealing when we break out just its weakest demographics or regions?
Also, it is a mistake to be too declarative about a "European model," yes there is such a thing, but it is a broad church and the arrangements and details can vary hugely. (In some sense, this is what a lot of the current debate in Europe is about.) Greece is not Norway as Germany is not Italy - but all of them follow "the European model" broadly speaking. The devil is in the details.
3
Thankfully many people and societies have different views than Wall Street and the emphasis is on what is good for people and sometimes that means restrictions on business.
4
Priceless.
Rattner's last paragraph--if not the entire column--could be summarized as "Come on, Europe, join the rest of the world in a race to the bottom. Slave wages for workers, and make the planet safe for plutocrats!"
He holds the U.S. up as the world's model--(See chart: U.S. Zooms Ahead)--and hopes nobody will bring up the 30+ years of stagnating or falling wages in the U.S.
Rattner's last paragraph--if not the entire column--could be summarized as "Come on, Europe, join the rest of the world in a race to the bottom. Slave wages for workers, and make the planet safe for plutocrats!"
He holds the U.S. up as the world's model--(See chart: U.S. Zooms Ahead)--and hopes nobody will bring up the 30+ years of stagnating or falling wages in the U.S.
11
The expatriation of Americans to live in Europe is growing faster than another time in history. Something is very wrong with Mr. Rittner's theory if everyone in America wants to live in Europe.
4
"It has been said that democracy is the worst form of government except all the others that have been tried." Winston Churchill
There is not a singular optimal solution to any political or economic system. Each has its pluses and minuses. There can be no doubt that any of the systems in place today around the world, are the direct result of trial and error over many years, and the tinkering that takes place is often in response to changing dynamics.
In Europe, as Rattner argues, the regulatory burden on companies is real. If you have ever worked there (and I have), trying to open or close a European business or lay off workers is incredibly burdensome. Not that there should not be concern for the typical worker, but making more components of a company rigid and costly to manage, does not help either. We can look at automakers here as an example of what happens there is too much rigidity. It slows down responses to outside influences and competition, and puts stakeholders at risk.
The biggest causes of the deflationary impulses we are seeing today are global competition for work (excess supply of labor) and technology. Competition has a way of changing dynamics in a way that can be very destructive. The correct answer to the problem isn't hoping for the past, but figuring out how to position for the future reality. The US system is well positioned for that; Europe is not. Doesn't mean Europe doesn't have some good bits, just not optimal.
There is not a singular optimal solution to any political or economic system. Each has its pluses and minuses. There can be no doubt that any of the systems in place today around the world, are the direct result of trial and error over many years, and the tinkering that takes place is often in response to changing dynamics.
In Europe, as Rattner argues, the regulatory burden on companies is real. If you have ever worked there (and I have), trying to open or close a European business or lay off workers is incredibly burdensome. Not that there should not be concern for the typical worker, but making more components of a company rigid and costly to manage, does not help either. We can look at automakers here as an example of what happens there is too much rigidity. It slows down responses to outside influences and competition, and puts stakeholders at risk.
The biggest causes of the deflationary impulses we are seeing today are global competition for work (excess supply of labor) and technology. Competition has a way of changing dynamics in a way that can be very destructive. The correct answer to the problem isn't hoping for the past, but figuring out how to position for the future reality. The US system is well positioned for that; Europe is not. Doesn't mean Europe doesn't have some good bits, just not optimal.
1
Adam Smith died in 1790, western style democracy has been with us since the early 1950s. Adam Smith's economy and western democracy are not compatible.
3
Everybody reading this column needs to read Krugman's blog. He explains that with an average (goal) inflation rate of 2% a year, many of these countries are doing fine. The outliers are Italy (too high) and the US (not shown here), which has risen only 20% during this time period.
You "lose competitiveness" by paying people way below what they should be getting, so they and the country are struggling.
You "lose competitiveness" by paying people way below what they should be getting, so they and the country are struggling.
10
Business is anti people
CEOs are evil rich, evil, they should be interned in concentration camps
We don't need businesses. We all know business's don't generate jobs, jobs are crated by unions, progressives, and government stimulus
As we know, there is not a single rich person in the world who became rich on his or her own, all of them stole other people's money to become rich
We should confiscate all businesses and run them for the benefit of people. We, as in the government should run them. Some may call it socialism. Who caress about labels.
As we all know, this is the crux of progressive agenda. Anyone who disagrees with any of this is a evil rich person, Koch supporter, or DINO like Hillary, and does not deserve to be heard from. Such people should be kept down and their voices silenced.
CEOs are evil rich, evil, they should be interned in concentration camps
We don't need businesses. We all know business's don't generate jobs, jobs are crated by unions, progressives, and government stimulus
As we know, there is not a single rich person in the world who became rich on his or her own, all of them stole other people's money to become rich
We should confiscate all businesses and run them for the benefit of people. We, as in the government should run them. Some may call it socialism. Who caress about labels.
As we all know, this is the crux of progressive agenda. Anyone who disagrees with any of this is a evil rich person, Koch supporter, or DINO like Hillary, and does not deserve to be heard from. Such people should be kept down and their voices silenced.
1
The closer a nation gets to unfettered capitalism the more it's workforce becomes nothing but a tool to be used up and discarded when it benefits the profit making objective.
The closer a nation gets to socialism the more difficult it becomes to run and expand profit making businesses, and to harness imagination.
The U.S. has become a pathological model for the former and Europe has gone too far in it's drive to protect it's citizens.
There has to be something in the middle.
The closer a nation gets to socialism the more difficult it becomes to run and expand profit making businesses, and to harness imagination.
The U.S. has become a pathological model for the former and Europe has gone too far in it's drive to protect it's citizens.
There has to be something in the middle.
2
Nice to see the writer is out to save the EU from itself:
"Flawed energy policies"; oh you mean like Germany, which now is making ONE THIRD of its energy from renewables; what you he do, have them build more coal-burning plants?
"Archaic restrictions on hiring and firing workers" means get rid of their unions.
Maybe all that annoying red tape he refers to is that inconvenient stuff that protects the environment and preserves the dignity of the workers.
In other words, have the EU become like the U.S.
I hope not!
~TR
"Flawed energy policies"; oh you mean like Germany, which now is making ONE THIRD of its energy from renewables; what you he do, have them build more coal-burning plants?
"Archaic restrictions on hiring and firing workers" means get rid of their unions.
Maybe all that annoying red tape he refers to is that inconvenient stuff that protects the environment and preserves the dignity of the workers.
In other words, have the EU become like the U.S.
I hope not!
~TR
3
If Mr. Rattner is going to argue that Europe is uncompetitive, does he not have an obligation to explain why Germany, the Netherlands, Belgium, and Switzerland all have a surplus in their balance of trade as opposed to the nearly $700,000,000,000 deficit in our balance of trade? The ultimate measure of competitiveness is the ability to sell what you produce and Europe seems to be doing quite well in that regard.
5
AMERICA'S ANTI-BUSINESS STANCE
"Europe needs to become more competitive in global markets" ...Steven Rattner
European Central Bank is making the same mistake the USA is making. Both are spending trillions of Euro's and Dollars to stimulate their economies. The money all goes to the 1%. Class warfare is reaching explosive levels because the economic stimulus must go directly to the citizens. Only then can the stimulus be multiplied through the multiplier effect of each dollar being used in multiple transactions over the course of each GDP year.
The American and European anti-business strategy of feeding money via banks into the stock market is that there is no multiplier effect because the transaction stops.
To be pro-business the stimulus must go directly to citizens, then each dollar becomes 3 or more dollars through being spent 3 or more times during the course of the year, raising the GDP by 3 times the stimulus amount.
The error is tragic, because even the 1 % who enjoy making 20% per year from the current bank/stock market stimuli, would make 60% per year, triple the profits, from direct cash stimulus because that multiplies corporate earnings from personal consumption, raising BOTH the earnings of companies AND the price-earnings multiple of corporate stocks.
"Europe needs to become more competitive in global markets" ...Steven Rattner
European Central Bank is making the same mistake the USA is making. Both are spending trillions of Euro's and Dollars to stimulate their economies. The money all goes to the 1%. Class warfare is reaching explosive levels because the economic stimulus must go directly to the citizens. Only then can the stimulus be multiplied through the multiplier effect of each dollar being used in multiple transactions over the course of each GDP year.
The American and European anti-business strategy of feeding money via banks into the stock market is that there is no multiplier effect because the transaction stops.
To be pro-business the stimulus must go directly to citizens, then each dollar becomes 3 or more dollars through being spent 3 or more times during the course of the year, raising the GDP by 3 times the stimulus amount.
The error is tragic, because even the 1 % who enjoy making 20% per year from the current bank/stock market stimuli, would make 60% per year, triple the profits, from direct cash stimulus because that multiplies corporate earnings from personal consumption, raising BOTH the earnings of companies AND the price-earnings multiple of corporate stocks.
This discussion is interesting, but fundamentally metrics like GDP are also simplistic and perhaps more so than stimulus v austerity. That's so for a number of reasons, to pick a few:
- Personal income in the US is so strongly an exponential distribution that GDP is a meaningless measure for almost any given person. Actually most people even those measured as affluent (say up to a 250K family income in NYC or Boston) don't feel rich by any stretch and this with good reason.
- The red tape Mr Rattner decries is there, and I fully agree that the situation is horrible and that it suffocates the economy. In my country, Greece, people were working harder than many other Europeans by any survey. However, systemic inefficiencies such as red tape strongly held back productivity and carried more weight, I believe, than the size of the public sector, in setting back the economy. However, said red tape existed BEFORE the crisis. The crisis and the politics of austerity is the cause that changed the financial situation of so many people. This is key: We have the natural experiment and its outcomes. It's much harder to explain the outcome with a many-years-back lagged causality as Mr. Rattner tries to do.
- The politics of subsidizing subgroups exists in the US as well, except in the US such groups are investment bankers, large agribusiness, oil & mining companies, and at city level firefighters and police. In Europe it is employee unions. The distortions are grave in either case.
- Personal income in the US is so strongly an exponential distribution that GDP is a meaningless measure for almost any given person. Actually most people even those measured as affluent (say up to a 250K family income in NYC or Boston) don't feel rich by any stretch and this with good reason.
- The red tape Mr Rattner decries is there, and I fully agree that the situation is horrible and that it suffocates the economy. In my country, Greece, people were working harder than many other Europeans by any survey. However, systemic inefficiencies such as red tape strongly held back productivity and carried more weight, I believe, than the size of the public sector, in setting back the economy. However, said red tape existed BEFORE the crisis. The crisis and the politics of austerity is the cause that changed the financial situation of so many people. This is key: We have the natural experiment and its outcomes. It's much harder to explain the outcome with a many-years-back lagged causality as Mr. Rattner tries to do.
- The politics of subsidizing subgroups exists in the US as well, except in the US such groups are investment bankers, large agribusiness, oil & mining companies, and at city level firefighters and police. In Europe it is employee unions. The distortions are grave in either case.
1
Lets talk about American Capitalism's anti human stance for a change.
5
Just another right-wing excuse to avoid a faulty economic conclusion.. It's time for the author and those in his circle to admit that "austerity" was not the solution for crumbling economies.
5
Prof. Krugman comments on this column:
http://krugman.blogs.nytimes.com//2015/01/29/i-do-not-think-that-number-...
http://krugman.blogs.nytimes.com//2015/01/29/i-do-not-think-that-number-...
3
Economist Dean Baker comments on this column:
Arithmetic Is Very Simple, But It's Still True
Steven Rattner doesn't like people focusing on stimulus as a path to help Europe grow because it is "simplistic." Instead he wants Europe to focus on reducing business regulation, protections for workers, and taxes for the wealthy.
Interestingly, he presents zero evidence that these changes will boost the continent's growth, in contrast to the now vast amount of evidence (e.g. here, here, and here) that stimulus will increase growth. On their face, many assertions seem outright wrong. For example, according to the OECD's assessment, employment protection for workers in Germany are the second strongest in Europe, yet it has an unemployment rate of 5.1 percent. This suggests that labor market protections are not the biggest problem stunting growth.
Rattner also warns about Europe and even Germany losing "competitiveness." It is not clear what meaning he assigns to that word, but Germany has a trade surplus of more than 6.0 percent of GDP, in contrast to a deficit of 2.4 percent of GDP in the United States.
In some cases, his complaints not only lack evidence, but they defy logic. It is not efficient to allow companies to dismiss workers at will. Long-term employees make substantial commitments and sacrifices to develop firm specific skills...
More at http://www.cepr.net/index.php/blogs/beat-the-press/arithmetic-is-very-si...
Arithmetic Is Very Simple, But It's Still True
Steven Rattner doesn't like people focusing on stimulus as a path to help Europe grow because it is "simplistic." Instead he wants Europe to focus on reducing business regulation, protections for workers, and taxes for the wealthy.
Interestingly, he presents zero evidence that these changes will boost the continent's growth, in contrast to the now vast amount of evidence (e.g. here, here, and here) that stimulus will increase growth. On their face, many assertions seem outright wrong. For example, according to the OECD's assessment, employment protection for workers in Germany are the second strongest in Europe, yet it has an unemployment rate of 5.1 percent. This suggests that labor market protections are not the biggest problem stunting growth.
Rattner also warns about Europe and even Germany losing "competitiveness." It is not clear what meaning he assigns to that word, but Germany has a trade surplus of more than 6.0 percent of GDP, in contrast to a deficit of 2.4 percent of GDP in the United States.
In some cases, his complaints not only lack evidence, but they defy logic. It is not efficient to allow companies to dismiss workers at will. Long-term employees make substantial commitments and sacrifices to develop firm specific skills...
More at http://www.cepr.net/index.php/blogs/beat-the-press/arithmetic-is-very-si...
7
Good points and as far as I am concerned nobody has tried real austerity. What they have is somewhat cutting back the excessive and unaffordable government spending. Has any country with high debt actually reduced it, other than just not paying? None that I know of and I bet none at all. Argentina somewhat addressed their issue and many are critical of their solution. Greece might have to use similar actions.
1
Besides being rich and being a former NY Times reporter (decades ago) what credentials does Rattner have to opine on European economic policies? Being a rich Wall Street financier may qualify him as an expert in making his own money, but it hardly qualifies him an expert in economics. And yes, I am aware of his bachelor's degree in economics, but if this was enough then the NYTs could choose from thousands of under-employed millennials, all of whom probably have more experience in the downside of the economics of income inequality than Mr. Rattner.
5
Europe will be fine, Mr. Ratner. Making it easier to treat their workforce with the same indifference as we do in the U.S. will not solve any of their problems.
Europeans are good at a lot of things, but their skills are wasted in the free market hoopla forced upon them by the glorification of pure capitalism. Hiring, firing, and underpaying their workers at will for the glory of corporate profits will not do it.
There is an old saying in Europe that Heaven is the place where:
The cooks are French,
The police are British,
The engineers are German,
The lovers are Italian, and
The whole thing is organized by the Swiss....
Whereas, Hell is the place where:
The cooks are British,
The police are German,
The engineers are French,
The lovers are Swiss, and
The whole thing is organized by the Italians.
An integrated continent, with a little central planning where each country contributes to the whole in accordance with their better skills, coupled with less interference by the global banks is what they need.
Now if they only concentrated a little more on political integration, instead of trying to run their continent like a subsidiary of the ECB! One can only dream....
Europeans are good at a lot of things, but their skills are wasted in the free market hoopla forced upon them by the glorification of pure capitalism. Hiring, firing, and underpaying their workers at will for the glory of corporate profits will not do it.
There is an old saying in Europe that Heaven is the place where:
The cooks are French,
The police are British,
The engineers are German,
The lovers are Italian, and
The whole thing is organized by the Swiss....
Whereas, Hell is the place where:
The cooks are British,
The police are German,
The engineers are French,
The lovers are Swiss, and
The whole thing is organized by the Italians.
An integrated continent, with a little central planning where each country contributes to the whole in accordance with their better skills, coupled with less interference by the global banks is what they need.
Now if they only concentrated a little more on political integration, instead of trying to run their continent like a subsidiary of the ECB! One can only dream....
4
Mr. Rattler obviously wants to take away vacations and healthcare, pensions and sick leave. That will spruce up Europe....even though the problem in Europe is the same as it was here?.....lack of demand....oh, yeah, he's a confidence fairy.
6
Ironic that, on the same day Nick Kristoff's column about increasing empathy appears, we have Rattner's column, which demonstrates a clear lack of that virtue.
7
The U.S. GDP soars 28% since 2000. Where's the compensation metric for the U.S. over the same period? You seem to have omitted it.
11
Rattner seems to live in an upside-down ethical universe.
First, he presents charts that show increased labor compensation, or "costs" going up at a greater rate than "output", as if that were evidence of a problem. What on earth makes strong compensation a problem, instead of something for which to admire Europe!? Labor actually gets paid well - imagine that! There is a problem if you believe that no one should be compensated for more than their output. What, then, of compensation for owners, investors, and upper management? If you allow them to be compensated for more than their output (which defines their take of the pie), then you are using a double standard. As a matter of fact, the countries Rattner cites treat labor compensation as if labor deserved a share of the profits as well as owners an upper management. In sum, Rattner's ethical argument only works if a double-standard is used.
Regarding competition, a similar upside-down ethical perspective is apparent. What Rattner labels as archaic and "uncompetitive" includes policies like paid sick and maternity leave, enough time not spent working to live a meaningful life rather than always being utterly devoted to the boss's profits, an energy system that is safe and sustainable, and so on.
Yes, these cost $, and so, cut into profits that are higher in countries that don't have such policies. But that's because in the system Rattner supports, the least ethical business is the most competitive.
First, he presents charts that show increased labor compensation, or "costs" going up at a greater rate than "output", as if that were evidence of a problem. What on earth makes strong compensation a problem, instead of something for which to admire Europe!? Labor actually gets paid well - imagine that! There is a problem if you believe that no one should be compensated for more than their output. What, then, of compensation for owners, investors, and upper management? If you allow them to be compensated for more than their output (which defines their take of the pie), then you are using a double standard. As a matter of fact, the countries Rattner cites treat labor compensation as if labor deserved a share of the profits as well as owners an upper management. In sum, Rattner's ethical argument only works if a double-standard is used.
Regarding competition, a similar upside-down ethical perspective is apparent. What Rattner labels as archaic and "uncompetitive" includes policies like paid sick and maternity leave, enough time not spent working to live a meaningful life rather than always being utterly devoted to the boss's profits, an energy system that is safe and sustainable, and so on.
Yes, these cost $, and so, cut into profits that are higher in countries that don't have such policies. But that's because in the system Rattner supports, the least ethical business is the most competitive.
4
Macroeconomic decisions like the recent one by European Central Bank erroneously presume that circumstances are similar across many different countries. So their consequences can only be unpredictable. Europe is paralyzed by the new ideology of "one size fits all", of which the Euro is the worst example, together with the growth of the European bureaucracy in Brussels. The Europeans are not really cooperating, they just chained themselves together, right when maximum flexibility is required just to get by in the globalized environment.
1
Translation: please cut retirements and benefits, chop our taxes to a level we select, eliminate most environmental and business regulation or oversight, or we're gonna continue to hold our breaths until you turn blue.
8
What Mr. Rattner doesn't seem to understand is that the last thing Europe needs right now is "labor market reforms" which are basically euphemisms for cutting and/or suppressing wages.
The facts are as follows: the EZ runs a large trade surplus with the rest of the world, with Germany contributing around 60% of it. Germany also runs persistent trade surpluses with its EZ counterparts. Ordinarily, this should put upward pressure on the Euro thereby reducing the trade surplus. But Germany and its EZ partners are locked in a deadly embrace which kills growth in the EZ, forcing the ECB to cut rates and forcing the euro down even more. Germany thus has become a giant deflationary force for the entire world.
Another way to implicitly make German goods more expensive is to raise wages there - this would also have the benefit of reducing the wage deflation required to make countries in the periphery competitive versus Germany. On the other side, more wages and incomes in German workers pockets would also boost demand, thereby helping other economies as well.
Mr. Rattner is peddling the same tired medicine that the neo-liberals spout as a pavlovian response anytime there is weak economic data. They should be completely ignored by EZ voters.
The facts are as follows: the EZ runs a large trade surplus with the rest of the world, with Germany contributing around 60% of it. Germany also runs persistent trade surpluses with its EZ counterparts. Ordinarily, this should put upward pressure on the Euro thereby reducing the trade surplus. But Germany and its EZ partners are locked in a deadly embrace which kills growth in the EZ, forcing the ECB to cut rates and forcing the euro down even more. Germany thus has become a giant deflationary force for the entire world.
Another way to implicitly make German goods more expensive is to raise wages there - this would also have the benefit of reducing the wage deflation required to make countries in the periphery competitive versus Germany. On the other side, more wages and incomes in German workers pockets would also boost demand, thereby helping other economies as well.
Mr. Rattner is peddling the same tired medicine that the neo-liberals spout as a pavlovian response anytime there is weak economic data. They should be completely ignored by EZ voters.
5
We are lying ourselves into the future economic hardship.
We don’t want to increase the taxes because that would slow down our economic growth. We don’t want to print the money because it would create the rampant inflation.
Thus we came up with the “brilliant” idea – running the chronic budget deficits and piling up the national debt.
However, there are only two rational ways to pay off the national debt – increasing the taxes or printing the money.
I have never thought I would live long enough to witness the voters approving a massive construction of the Potemkin Villages and harming the future generations.
I believed it could only have happened in autocratic tsar’s Russia in late 18th century...
We don’t want to increase the taxes because that would slow down our economic growth. We don’t want to print the money because it would create the rampant inflation.
Thus we came up with the “brilliant” idea – running the chronic budget deficits and piling up the national debt.
However, there are only two rational ways to pay off the national debt – increasing the taxes or printing the money.
I have never thought I would live long enough to witness the voters approving a massive construction of the Potemkin Villages and harming the future generations.
I believed it could only have happened in autocratic tsar’s Russia in late 18th century...
1
There is a third way to pay off the national debt, and that is to raise the aggregate pool of wealth from which the taxes are collected. Just imagine all of the untapped productive potential parked on sofas eating french fries.
KBronson,
The alleged third way - that’s exactly what has been promised to us about three decades ago.
Did it work at all? Have our federal budget deficits dwindled over the last decades or exploded?
The problem with your proposal is that those who got wealthy used it to corrupt the elected representatives, slashed own taxes, moved their businesses and corporate headquarters offshore, and created incredibly lot tax loopholes...
Do I have to continue or you already understand the problem?
The alleged third way - that’s exactly what has been promised to us about three decades ago.
Did it work at all? Have our federal budget deficits dwindled over the last decades or exploded?
The problem with your proposal is that those who got wealthy used it to corrupt the elected representatives, slashed own taxes, moved their businesses and corporate headquarters offshore, and created incredibly lot tax loopholes...
Do I have to continue or you already understand the problem?
1
KBronson,
Those parked on sofa eating only the french fries are the same people who lost their jobs after their factories were shipped overseas.
It’s extremely hard to create new wealth while being unemployed... It’s tough be find a job as long as our wages are higher than the Chinese ones...
How do you think that we could create the wealth here in America by exporting our factories and industries overseas?
Those parked on sofa eating only the french fries are the same people who lost their jobs after their factories were shipped overseas.
It’s extremely hard to create new wealth while being unemployed... It’s tough be find a job as long as our wages are higher than the Chinese ones...
How do you think that we could create the wealth here in America by exporting our factories and industries overseas?
2
The comparisons between the US economy and the many economies of the EU is illogical and specious. For example, it's often stated by various NYTimes readers that the US should emulate the quasi-socialist economy of Norway. The idea is absurd. First Norway has a population of only 5 million, while the US is in excesses of 300 million. Norway's population lacks cultural and racial diversity, unlike the US. Most important Norway obtains its wealth (each citizen is technically a millionaire) almost exclusively from digging deep into the ocean floor and extracting oil, which it exports to polluting countries around the world. Now, if it's agreed that the US should do the same with respect to oil exploration and exportation, then I'd happily follow the socialist Norwegian model.
6
US is the largest producer of oil in the world. The problem is that the US gives away the oil to private companies instead of sharing the profit with their citizens. That is the difference.
2
"The comparisons between the US economy and the many economies of the EU is illogical and specious."
Agreed. We can all learn from each other, but we all have different sets of facts to contend with. I agree that we couldn't and shouldn't just blindly adopt Norwegian practices, but I assume then you also agree that Rattner's column suggesting that Germany, France, Spain, Italy, Greece and Portugal all just adopt US practices is equally insipid.
Agreed. We can all learn from each other, but we all have different sets of facts to contend with. I agree that we couldn't and shouldn't just blindly adopt Norwegian practices, but I assume then you also agree that Rattner's column suggesting that Germany, France, Spain, Italy, Greece and Portugal all just adopt US practices is equally insipid.
just to talk about italy: many many businesses there are--or were--small craft-based businesses--winemaking, olive oil, iron, leather, wood, terra cotto, pottery, tailoring, frame making, etc etc. this is what makes italian goods prized. skills are passed down through generations. because there is no money in people's pockets to spend on these goods, such businesses are dying by the day and will be all but extinct in the current climate. italy will no longer be italy. thanks a lot, europe. thanks too america, for your weak dollar policies.
Please think what caused the recession in Europe? Mainly the big banks betting on USA subprime mortgage securities. So the big corporations in USA which have substandard regulatory practices caused a worldwide recession, and the solution to bring Europe out of continued recession is to deregulate European corporations? Brilliant! I'd rather be middle working class in Germany than in USA any day of the week.
10
To business hating liberal/progressives, the only primary objective of any business is to provide jobs for workers rather than profits for shareholders.
2
Fascinating apostasy on your part. This is not only 180 degree contrary to the central tenets of modern conservative economics (as explicitly stated by Milton Friedman, it's father) but also to what is standard curriculum in all major AMerican business schools.
You are perfectly right.
Europe is a nightmare and European politics are a joke where everybody trays to cheat the neighbor State with uncontrolled money transfers.
That will be until there will not be a Federated State ad not any more a random assembly of independent states all with Veto right because all decisions must be unanimous, which means a global immobility.
Among those states there is Italy, with its ridiculous Prime Ministers, all depending from the Berlusconi's willing, including Mr Renzi which first agrees with Berlusconi and then undertake the resulting willing to his own party. And this goes on since 25 years.
Mr Renzi in his end year measures for the Italian crisis, introduced maliciously also a law to depersonalize the falsification of accounts in balance, which would have allowed Berlusconi to be President of the Italian State, but somebody noticed that addition and Renzi suddenly said that it was a mistake. This is the new young brilliant politician: a slave of a criminal.
Anyway my position is that is better to stop this EU pantomime and the Euro with it, until they will decide for a Federated State with a single Government, with a single voice and a new single money.
Europe is a nightmare and European politics are a joke where everybody trays to cheat the neighbor State with uncontrolled money transfers.
That will be until there will not be a Federated State ad not any more a random assembly of independent states all with Veto right because all decisions must be unanimous, which means a global immobility.
Among those states there is Italy, with its ridiculous Prime Ministers, all depending from the Berlusconi's willing, including Mr Renzi which first agrees with Berlusconi and then undertake the resulting willing to his own party. And this goes on since 25 years.
Mr Renzi in his end year measures for the Italian crisis, introduced maliciously also a law to depersonalize the falsification of accounts in balance, which would have allowed Berlusconi to be President of the Italian State, but somebody noticed that addition and Renzi suddenly said that it was a mistake. This is the new young brilliant politician: a slave of a criminal.
Anyway my position is that is better to stop this EU pantomime and the Euro with it, until they will decide for a Federated State with a single Government, with a single voice and a new single money.
1
"That can be achieved only by a variety of policy changes, such as keeping top tax rates at sensible levels and regulatory reforms that would give companies more freedom to manage their businesses as they see fit, including, when necessary, closing plants and reducing head counts."
Mr Rattner is clearly hoping that his audience hasn't paid close attention to the economic policies and dynamics in Europe. The problem isn't structural or labor driven, it's about a unified currency without a unified political or economic equivalent to a federal government. Mr Rattner, like many on Wall Street, hope to utilize an economic crisis to slash social programs and labor protections while reducing tax rates on people like himself. Shame on the Times for allowing propaganda like this to be spouted on its pages.
Mr Rattner is clearly hoping that his audience hasn't paid close attention to the economic policies and dynamics in Europe. The problem isn't structural or labor driven, it's about a unified currency without a unified political or economic equivalent to a federal government. Mr Rattner, like many on Wall Street, hope to utilize an economic crisis to slash social programs and labor protections while reducing tax rates on people like himself. Shame on the Times for allowing propaganda like this to be spouted on its pages.
5
You are absolutely right.
All voices on the right should be silenced.
The right is evil rich. They are very similar to the fascists that ruled Germany and Italy and led to ww2
No amount of shame and punishment is enough for the right, the evil rich, anyone who voted against Obama, is not a huge fan of Krugman, or does not think e warren is the best thing to happen since cave men discovered fire.
We need to raise minimum wage to at least a hundred grand a year pronto. Also, need to raise the marginal tax rate to 95% on the evil rich! which we should define as anyone making a hundred grand a year. All education, healthcare, child care, old age care, retirements, care during pregnancy, shall be borne by the government. We can pay for this by the taxes raised on the evil rich.
All voices on the right should be silenced.
The right is evil rich. They are very similar to the fascists that ruled Germany and Italy and led to ww2
No amount of shame and punishment is enough for the right, the evil rich, anyone who voted against Obama, is not a huge fan of Krugman, or does not think e warren is the best thing to happen since cave men discovered fire.
We need to raise minimum wage to at least a hundred grand a year pronto. Also, need to raise the marginal tax rate to 95% on the evil rich! which we should define as anyone making a hundred grand a year. All education, healthcare, child care, old age care, retirements, care during pregnancy, shall be borne by the government. We can pay for this by the taxes raised on the evil rich.
1
The remarkable thing is that President Obama has been trying to lead American down the path of Eurosocialism for the past 6 years even as democratic socialism is collapsing in Europe.
The problem with democratic socialism is that it degenerates into a contest between politicians where elected office is awarded to those who can give away the most free stuff to the public while asking the least amount in return. Eventually, these governments run out of other people's money, the shruken private sector economy is riddled with corruption and inefficiency, and the system collapses. Greece is leading the way. Other countries will follow.
The European Central Bank is keeping the game going for a couple years more by monetizing a trillion+ Euros of government debt, in violation of its charter and European law. A sign of how desperate things have become.
The problem with democratic socialism is that it degenerates into a contest between politicians where elected office is awarded to those who can give away the most free stuff to the public while asking the least amount in return. Eventually, these governments run out of other people's money, the shruken private sector economy is riddled with corruption and inefficiency, and the system collapses. Greece is leading the way. Other countries will follow.
The European Central Bank is keeping the game going for a couple years more by monetizing a trillion+ Euros of government debt, in violation of its charter and European law. A sign of how desperate things have become.
2
Odd that they're doing austerity and we're doing this "socialism" (I wish!) and our economy's taking off and theirs is circling the drain, ain't it?
6
Nothing is "collapsing" in Europe. The reason Europe has not followed the US in adopting Reaganomics is that the voters there don't want it. There is no country in Europe in which voters do not support a national health system, living wages for all workers and universal child care for working families.
Does Europe have lower GDP growth than the US? Sure - but since growth here benefits mostly the top income tiers, why would most Europeans care? The truth is, our economy grows faster and creates more jobs, but the benefits of that growth don't go to most people and most jobs created are "McJobs" that are hardly worth having. Rattner should stop lying about that.
Does Europe have lower GDP growth than the US? Sure - but since growth here benefits mostly the top income tiers, why would most Europeans care? The truth is, our economy grows faster and creates more jobs, but the benefits of that growth don't go to most people and most jobs created are "McJobs" that are hardly worth having. Rattner should stop lying about that.
2
Robert,
US economy improved over the past year after Congress instituted the sequester and ended extended unemployment benefits. Keynesians predicted that these moves would lead the US back into recession and just the opposite happened.
US economy improved over the past year after Congress instituted the sequester and ended extended unemployment benefits. Keynesians predicted that these moves would lead the US back into recession and just the opposite happened.
The European problem has nothing to do with a business choice between austerity or stimulus. Europe is facing a socioeconomic political educational demographic super massive black hole time bomb due to birthrates that are well below replacement levels. With very small non- European populations and hostile immigration policies the end is in sight. China, India, Brazil, Indonesia, South Africa and Nigeria are moving in to replace them alongside of the United States. Moreover, they only spend a pittance on their military. Russia and Japan are also aging and shrinking. America is not due to a non-European native and immigrant population that leads the world in military spending and 1st world economic growth.
A friendly advice to the investors: Never lend the money to anybody who has the power to print the money.
If they could do it, why should they borrow the money from you?
Don’t think for a second that the White House and the Congress cannot print the money. They gave that power to the Fed Bank and they can take it back at any moment the voters instruct them to do so.
Here is the key question. Do you think that the voters care more about the investors than about themselves?
If you do, that’s purely utopian worldview...
Just check what just happened in Greece. The voters used to instruct their government to borrow the money. The very moment they were supposed to pay off the debt, the voters elected a new government that will not honor their previous obligations...
If they could do it, why should they borrow the money from you?
Don’t think for a second that the White House and the Congress cannot print the money. They gave that power to the Fed Bank and they can take it back at any moment the voters instruct them to do so.
Here is the key question. Do you think that the voters care more about the investors than about themselves?
If you do, that’s purely utopian worldview...
Just check what just happened in Greece. The voters used to instruct their government to borrow the money. The very moment they were supposed to pay off the debt, the voters elected a new government that will not honor their previous obligations...
1
When European was being flooded with Chinese money and was thus booming they had the same structural problems. The difference was the southern tiered countries were experience a lot of demand which in turn led to a lot of buying of German and French goods.
The bubble burst and deflation arrived with a lot of pain in Greece, Spain, Portugal and Ireland. Also most of Europe is aging more rapidly than in the United States. Europe and become more competitive and hope that American consumers will give them the demand they need. Better Germany inflate its economy and help create the demand that Europe needs.
The bubble burst and deflation arrived with a lot of pain in Greece, Spain, Portugal and Ireland. Also most of Europe is aging more rapidly than in the United States. Europe and become more competitive and hope that American consumers will give them the demand they need. Better Germany inflate its economy and help create the demand that Europe needs.
Rather says that Germany is suffering a problem with competitiveness. How then does he account for the fact that Germany has a very large trade surplus while the USA, where the restrictions he complains of are much less than in Germany is experiencing a large trade deficit. In fact, does he present any evidence at all to support his contention that rigidities in labor markets are the source of Europe's problems rather than its insane devotion to the idea that austerity is expansionary?
7
This whole article implies that the fact that US has had higher growth has been due to greater increases in labor productivity (nevermind the fact no data is provided showing what these figures are for the US). It also totally ignores the fact that the US has been engaged in both expansionary fiscal and monetary policy (especially the former) while europe has had a policy of austerity in regard to both spheres. During the recent severe worldwide downturn is it any surprise that US GDP grown so much vis-a-vis European nation's?
3
Yes, the one percent has done very well in the U.S., boosting our economic figures, while most of the rest of us have been treading water at best. Rattner doesn't seem to be concerned that the relative success of the U.S. economy, compared to most of Europe, is built on the backs of increasingly cheap labor (with fewer benefits) in this country, leading to extreme income inequality not seen here since the 1920's. According to financier Rattner, what's good for Wall Street is good for the U.S.A., but don't look behind those glowing economic figures to see that they profit only the select few, not the many.
It's a matter of priorities. Do we want a government that caters mainly to the desires of the wealthy and big corporations, or do we want a government that looks out for the well being of the rest of us?
It's a matter of priorities. Do we want a government that caters mainly to the desires of the wealthy and big corporations, or do we want a government that looks out for the well being of the rest of us?
9
Both poverty and recession are events that occur in the minds of individuals. From Mr. Rattner's perspective the problems in Europe are mostly the problems of people like him, businessmen. They cannot fire as they will, so obviously they will not hire when they can, so government regulations drive businessmen to further recession.
But it is all an illusion. Instead of grousing about labor laws that have existed for decades how about looking at all the other business practices and actually making adjustments to improve per-worker-productivity? They have to come to work a certain number of hours a day, what they do when they get there is up to you. Or is being a businessman just sitting back and asking the government to create an environment in which you are guaranteed a profit just because you are a businessman?
Just so I'm having a problem with the oft repeated mention of the current low borrowing costs in various at risk Euro zone countries. For some reason Paul Krugman likes to flash this data around as well. But no one seems to want to analyze this at all. Could it be the current rates are low because there is a lot more money looking for a place to go then borrowers with ideas they want to fund?
If people actually started looking to borrow funds would the rates stay so low?
Just asking.
But it is all an illusion. Instead of grousing about labor laws that have existed for decades how about looking at all the other business practices and actually making adjustments to improve per-worker-productivity? They have to come to work a certain number of hours a day, what they do when they get there is up to you. Or is being a businessman just sitting back and asking the government to create an environment in which you are guaranteed a profit just because you are a businessman?
Just so I'm having a problem with the oft repeated mention of the current low borrowing costs in various at risk Euro zone countries. For some reason Paul Krugman likes to flash this data around as well. But no one seems to want to analyze this at all. Could it be the current rates are low because there is a lot more money looking for a place to go then borrowers with ideas they want to fund?
If people actually started looking to borrow funds would the rates stay so low?
Just asking.
Europe is losing a lot of Jewish people these days, and when you lose them, you also lose some of your common sense and understanding of reality.
1
Rattner is selling a bill of goods here. The main thing that set the US apart since 2008 is that the European nations forced austerity on their people, which cut their spending power and hence their demand for goods. Guess what - output fell, just the way the graph shows. While Americans also took a bath, the Obama administration resisted the Republican/conservative prescription of all-austerity-all-the-time (for thee but not for me).
5
Yep, Rattner wants to replace a "simplistic debate" with an even more simplistic one, which I'd call simply simple-minded.
1
"....keeping top tax rates at sensible levels and regulatory reforms that would give companies more freedom to manage their businesses as they see fit, including, when necessary, closing plants and reducing head counts."
Sensible for whom? The taxpayer or the society? The interests of one are not always the interests of the other. Businesses rely on the health of the society they are a part of, and if tax rates become too "sensible" from their point of view, either the publics of their host countries have to make up the difference or watch their quality of life and standard of living take a nose dive.
And I'll say nothing about deregulation except that regulations came into being for good reasons.
The globalization of capital has produced stagnation among the middle classes of many advanced economies.
Sensible for whom? The taxpayer or the society? The interests of one are not always the interests of the other. Businesses rely on the health of the society they are a part of, and if tax rates become too "sensible" from their point of view, either the publics of their host countries have to make up the difference or watch their quality of life and standard of living take a nose dive.
And I'll say nothing about deregulation except that regulations came into being for good reasons.
The globalization of capital has produced stagnation among the middle classes of many advanced economies.
8
The problem with counting the national debt as a part of the GDP is that nobody will ever pay back this debt.
If it were possible, we would balance the federal budget today. If it were possible we would balance the budget and devote a significant portion of it to paying off the national debt.
Will it ever happen? Are you going to vote for a leader with such a political platform?
The answers are no and no.
So, what is the future outcome? At one moment the voters will be so burdened with paying the interest on our debt that they will rebel and instruct the politicians to print the money and pay off the national debt.
At that moment the national debt will stop being a part of the GDP and become what it really is, just an inflationary segment that should not be counted as the GDP...
It means to calculate our real GDP over the last 14 years, deduct the budget deficits every year from the alleged GDP to find out the truth.
When you accept the limited amount of hardships every year you blunt the strength of blow. If you accumulate all that negative energy into a single hit, the consequences could be devastating...
If we learn out that our GDP isn’t growing at all we will change the national course and stop exporting our manufacturing and industrial base overseas...
If it were possible, we would balance the federal budget today. If it were possible we would balance the budget and devote a significant portion of it to paying off the national debt.
Will it ever happen? Are you going to vote for a leader with such a political platform?
The answers are no and no.
So, what is the future outcome? At one moment the voters will be so burdened with paying the interest on our debt that they will rebel and instruct the politicians to print the money and pay off the national debt.
At that moment the national debt will stop being a part of the GDP and become what it really is, just an inflationary segment that should not be counted as the GDP...
It means to calculate our real GDP over the last 14 years, deduct the budget deficits every year from the alleged GDP to find out the truth.
When you accept the limited amount of hardships every year you blunt the strength of blow. If you accumulate all that negative energy into a single hit, the consequences could be devastating...
If we learn out that our GDP isn’t growing at all we will change the national course and stop exporting our manufacturing and industrial base overseas...
I have an old friend in France (French, but grew up here). He and his wife are ophthalmological surgeons in Paris, yet he said he's never been so poor in his life - his father was a banker. Anyone in management in France also works more than 40 hour weeks, as do solo entrepreneurs. Those who Rattner refers to are typically unionized or government workers, but even that is not as homogenous as one might be led to believe, just as here employees often work more than on the books.
1
Been to the UK recently, Mr. Rattner? The banks were bailed out there, too, at the cost of ordinary people's savings, mortgages, loans, salaries . . . anti-business? The UK economy is booming: for captains of industry and investment bankers and foreign nationals parking boatloads of cash in luxury buildings in the nation's capital, where, increasingly, ordinary UK citizens can't afford to live. Archaic rules about hiring and firing? How about the archaic rule of bailing out millionaires and leaving the NHS to rot? Same old excuses for shafting the Great Unwashed: it's for your own good!
8
I wonder how the US compares on the productivity versus wage growth chart? Also, the ECB has been saying all along that it can do only so much, that the fiscal policies (and structural changes) are up to the individual EU members.
1
1. The European countries, like all democracies, have a perfect right to hog-tie their economies if that's the way they like them.
2. Europe's loss is the US's gain.
2. Europe's loss is the US's gain.
3
The figure U.S. zooms ahead looks at GDP adjusting for inflation, but it does not adjust for population growth. From 2000 to 2014, the US population grew by about 13 percent, but the German population actually shrunk a tiny bit. So it appears that Germany actually experienced more economic growth PER CAPITA than the United States.
Of course, if we are interested in the nation -- our ability to fund the military, pay national debts, or negotiating muscle in international agreements -- the size of our total economy is relevant. But if we're talking about productivity and welfare, it the per capita calculation is better.
Of course, if we are interested in the nation -- our ability to fund the military, pay national debts, or negotiating muscle in international agreements -- the size of our total economy is relevant. But if we're talking about productivity and welfare, it the per capita calculation is better.
2
One wonders what that graph would look like were it not illustrating changes in GDP but changes in median household income. Something tells me that the caption would not be "U.S. Zooms Ahead" but "U.S. Falls Behind."
5
Mr Rattner is the problem not the solution. The economy is the problem it has a life of its own and it serves the needs only of itself and not of the people it is supposed to help.
When the potato blight hit Ireland the British government sent copies of Adam Smith, The Wealth of Nations to the starving peasants. We need an economy that is suited to the demands of the voters in Western Democracies. Our economy cannot not be fixed to suit the needs of democracy its design was for Wall Street financiers not ordinary human beings. We need a peaceful demise of the old economic order rather than a last apocalyptic boom in its boom and bust cycling.
When the potato blight hit Ireland the British government sent copies of Adam Smith, The Wealth of Nations to the starving peasants. We need an economy that is suited to the demands of the voters in Western Democracies. Our economy cannot not be fixed to suit the needs of democracy its design was for Wall Street financiers not ordinary human beings. We need a peaceful demise of the old economic order rather than a last apocalyptic boom in its boom and bust cycling.
8
"Archaic restrictions on hiring and firing workers..."
Yes, Europe should destroy the labor movement like Washington did. Excuse me, but I did not hear of any economic strife in Europe until Wall street crashed the world's economy with their greed and anti-regulation mania, so I doubt this Wall street financier's recommendations will get much traction in Europe. One look at the US's Gini coefficient should be sufficient to dismiss any recommendations coming from this side of the Atlantic - in Europe the politicians are still semi-responsive to the public, unlike the US.
Yes, Europe should destroy the labor movement like Washington did. Excuse me, but I did not hear of any economic strife in Europe until Wall street crashed the world's economy with their greed and anti-regulation mania, so I doubt this Wall street financier's recommendations will get much traction in Europe. One look at the US's Gini coefficient should be sufficient to dismiss any recommendations coming from this side of the Atlantic - in Europe the politicians are still semi-responsive to the public, unlike the US.
7
Actually this is complicated. If a company sees falling sales due to having to compete with newer technology producing better product that they can't afford or have little experience in developing , they should not be able to reduce employment to be able to survive? Or should gov't subsidize the now inefficient company to keep people employed?
How about absurd regulation in Greece that prevented a winery from making juice drinks enabling them to increase sales and workers as reported in the NYTimes?
These examples show how the reliance on the "evil" 1% as the problem is too simple.
How about absurd regulation in Greece that prevented a winery from making juice drinks enabling them to increase sales and workers as reported in the NYTimes?
These examples show how the reliance on the "evil" 1% as the problem is too simple.
1
This is a good point. Compensation should always be tied directly to output. I would be interested in Mr. Rattner's analysis of executive compensation in light of this argument. I'll give him a hint from 2012:
http://www.forbes.com/lists/2012/12/ceo-compensation-12-historical-pay-c...
So, my question would be: have CEO's shown a 500% increase in their output that would justify their corresponding rise in compensation since 1989?
It would seem that workers have become more productive over the years:
https://rwer.wordpress.com/2011/03/30/an-inquiry-into-the-nature-and-cau...
So, why haven't they gotten raises? Being in the US, I'm not going to begrudge another country's population the compensation that they probably deserve just because the top people in my country don't see the need to compensate workers here according to what they produce.
http://www.forbes.com/lists/2012/12/ceo-compensation-12-historical-pay-c...
So, my question would be: have CEO's shown a 500% increase in their output that would justify their corresponding rise in compensation since 1989?
It would seem that workers have become more productive over the years:
https://rwer.wordpress.com/2011/03/30/an-inquiry-into-the-nature-and-cau...
So, why haven't they gotten raises? Being in the US, I'm not going to begrudge another country's population the compensation that they probably deserve just because the top people in my country don't see the need to compensate workers here according to what they produce.
7
Kudos on the analysis, but don't count on any changes. After all, those who get to be paid for work without actually working also get to vote. And, you can be sure, there's also a lot of grudge-carriers who will insist that, no, all problems can be resolved if we just tax the rich. And however true it is that income inequality is not only grotesque but causes one to wonder about the humanity of those who ignore it, all problems are not solvable by eliminating rich people.
So it'll be interesting to see where the EU heads as, eventually, the borrowing costs to support unsupportable life-styles will become ... well, unsupportable, at least if the EU doesn't choose the path of simply inflating the currency to pay those costs. 'Course, if they do that then ....
So it'll be interesting to see where the EU heads as, eventually, the borrowing costs to support unsupportable life-styles will become ... well, unsupportable, at least if the EU doesn't choose the path of simply inflating the currency to pay those costs. 'Course, if they do that then ....
4
This is, quite understandably given the author, a classic Wall Street agitprop/marketing piece which tries to square the unsquarable circle - 'the operation was a stunning success (GDP growth)- unfortunately the patient (the middle class) died or is dying'.
The US crony capitalism plutocracy's economic performance has been fabulous for the top .01%, great for the tope 1%, sustainable for the top 10% and a descent, at various speeds, into humiliation and misery for the bottom 80%.
The broadly classified "middle class" has dropped from 53% of the population to 43% of the population over the last 10 years. It is reasonable to presume that few of that lost 10% have switched to shopping at Saks or Neiman Marcus. Poor Milty will have to adjust his diatribes on "takers".
The reality is that quality of life is overwhelming better for the bottom half of the economic ladder for those living in Western Europe rather than the USA.
This article smells like the Nomenklatura explaining the needs of Soviet economics in the 70s. '... not had a failure of scientific socialism rather a failure of socialists.'
Same smell " ... can be achieved only by ... keeping top tax rates at sensible levels and regulatory reforms that ... give companies more freedom to manage ... as they see fit, including ... closing plants ...reducing head counts" Translate - lower taxes for the richest, freedom to pollute, poison and collude for corporations, pink slips and part time minimum wage for the rest.
The US crony capitalism plutocracy's economic performance has been fabulous for the top .01%, great for the tope 1%, sustainable for the top 10% and a descent, at various speeds, into humiliation and misery for the bottom 80%.
The broadly classified "middle class" has dropped from 53% of the population to 43% of the population over the last 10 years. It is reasonable to presume that few of that lost 10% have switched to shopping at Saks or Neiman Marcus. Poor Milty will have to adjust his diatribes on "takers".
The reality is that quality of life is overwhelming better for the bottom half of the economic ladder for those living in Western Europe rather than the USA.
This article smells like the Nomenklatura explaining the needs of Soviet economics in the 70s. '... not had a failure of scientific socialism rather a failure of socialists.'
Same smell " ... can be achieved only by ... keeping top tax rates at sensible levels and regulatory reforms that ... give companies more freedom to manage ... as they see fit, including ... closing plants ...reducing head counts" Translate - lower taxes for the richest, freedom to pollute, poison and collude for corporations, pink slips and part time minimum wage for the rest.
9
It's more structural than this; too old, too white, a restrictive higher education system, too moribund, too elitist. Where is Europe's Apple, Google?
1
1) The chart indicating unit labor costs has no indication whether it uses real or nominal numbers, unlike the chart indicating GDP. Oversight?
2) How about a chart indicating U.S. per unit labor costs? That give us readers context.
3) Is there such as measure as unit management costs? How much is management paid per unit? If European management is paid less than American, would that make a difference? (an assumption, I know). Or is the cost of management included in the labor cost chart?
4) I've several friends in the Netherlands who own businesses, and they complain about some of the regulations, and liberal as I am, I agree that some are unreasonable. Yet none of business-owning friends want anything to do with what they regard as "American-style capitalism." As one said, the Netherlands' social safety net makes that country "the land of opportunity." He was willing to take a risk on opening a business (which has proved successful for 25 years) because he knew that failure, while painful, would not mean catastrophe.
4 John in Hartford is quite right: it's always a mistake to lump Europe together as one.
2) How about a chart indicating U.S. per unit labor costs? That give us readers context.
3) Is there such as measure as unit management costs? How much is management paid per unit? If European management is paid less than American, would that make a difference? (an assumption, I know). Or is the cost of management included in the labor cost chart?
4) I've several friends in the Netherlands who own businesses, and they complain about some of the regulations, and liberal as I am, I agree that some are unreasonable. Yet none of business-owning friends want anything to do with what they regard as "American-style capitalism." As one said, the Netherlands' social safety net makes that country "the land of opportunity." He was willing to take a risk on opening a business (which has proved successful for 25 years) because he knew that failure, while painful, would not mean catastrophe.
4 John in Hartford is quite right: it's always a mistake to lump Europe together as one.
6
The sovereign debt the ECB will buy under its QE program is already parked money, so the program has virtually zero likelihood of boosting money velocity.
1
But you forgot to mention the great infrastructure that the USA has versus the antiquated, collapsing European and why should they have a better social safety net when we can get away with nothing all in the name of competiviness i.e. corporate profits.
2
One can easily see that Europe's rules (if one can generalize) make things difficult for business. But what if Europe simply follows our lead? IT will be another race to the bottom. Time for both the US and Europe to find ways to burden goods from low wage markets with costs that make more of our goods competitive within our own markets. Protectionism. Yes, Europe is stagnant, but our model simply eliminated good jobs in favor or lousy ones.
2
Rattner is wrong! And internally contradicting! He does speak for the wealthy not the majority. He says cut tax rates on the wealthy and make it easy to get rid of workers.This is classic Globalizor clap trap.Increase the owners profits by finding cheaper labor.Yeah, how does that "help" the majority? It doesn't! And it appears,from the high levels of unemployment in Europe that they don't have trouble reducing the work force! Increase demand by spreading the wealth and that should make everyone happier.
3
So what you are saying is that if more of the national income goes to capital and less to labor that benefits labor. I like the subtlety with which you convey such a basic tenet.
5
Who but a Wall St financier would thing that "keeping top tax rates at a sensible" (i.e. low) level was the key reform for a competitive economy? How about paying workers enough to stimulate domestic demand? Sorry, says Ratner--that might reduce my unearned, excessive, low-tax income...
8
From Dean Baker:
Steven Rattner doesn't like people focusing on stimulus as a path to help Europe grow because it is "simplistic." Instead he wants Europe to focus on reducing business regulation, protections for workers, and taxes for the wealthy.
Interestingly, he presents zero evidence that these changes will boost the continent's growth, in contrast to the now vast amount of evidence (e.g. here, here, and here) that stimulus will increase growth. On their face, many assertions seem outright wrong. For example, according to the OECD's assessment, employment protection for workers in Germany are the second strongest in Europe, yet it has an unemployment rate of 5.1 percent. This suggests that labor market protections are not the biggest problem stunting growth.
Rattner also warns about Europe and even Germany losing "competitiveness." It is not clear what meaning he assigns to that word, but Germany has a trade surplus of more than 6.0 percent of GDP, in contrast to a deficit of 2.4 percent of GDP in the United States.
In short, this piece tells us that Rattner wants Europe to be more pro-business at the expense of the rest of society. He doesn't have any real argument as to why anyone who is not rich should support his position, although I suppose it is not simplistic.
Steven Rattner doesn't like people focusing on stimulus as a path to help Europe grow because it is "simplistic." Instead he wants Europe to focus on reducing business regulation, protections for workers, and taxes for the wealthy.
Interestingly, he presents zero evidence that these changes will boost the continent's growth, in contrast to the now vast amount of evidence (e.g. here, here, and here) that stimulus will increase growth. On their face, many assertions seem outright wrong. For example, according to the OECD's assessment, employment protection for workers in Germany are the second strongest in Europe, yet it has an unemployment rate of 5.1 percent. This suggests that labor market protections are not the biggest problem stunting growth.
Rattner also warns about Europe and even Germany losing "competitiveness." It is not clear what meaning he assigns to that word, but Germany has a trade surplus of more than 6.0 percent of GDP, in contrast to a deficit of 2.4 percent of GDP in the United States.
In short, this piece tells us that Rattner wants Europe to be more pro-business at the expense of the rest of society. He doesn't have any real argument as to why anyone who is not rich should support his position, although I suppose it is not simplistic.
18
This is really extremely deceptive. No mention of the bubble economy before 2008. No mention of the brutal terms dictated by Germany in return for even the most modest concessions. No mention of the astronomical unemployment that persists in Greece, Spain, and Portugal.
"[I]n the appropriate context, more public spending and investment and commendable efforts to avoid deflation... But..." But?! Large swathes of southern Europe are still in deep recession, even depression.
Yes, much EU legislation is dated and needs changing (much US legislation does too -- especially that protecting banksters). But to pretend that this is what's behind current EU malaise is delusional or dishonest.
"[I]n the appropriate context, more public spending and investment and commendable efforts to avoid deflation... But..." But?! Large swathes of southern Europe are still in deep recession, even depression.
Yes, much EU legislation is dated and needs changing (much US legislation does too -- especially that protecting banksters). But to pretend that this is what's behind current EU malaise is delusional or dishonest.
9
Spoken like a true Friedmanist. But of course this rant thinly masks the corporate elite goal of destroying governments' role to provide for a just society for all citizens, not just the chosen few (read: industrialists). And don't you just love the Orwellian phrase "create jobs by cutting head count"-- that will create jobs!
10
Funny, because he's replacing one simplistic argument - austerity vs. stimulus - with another that we're familiar with here - too much regulation and taxes. He's cherry picking to support his ideology.
Funny, because what the graph of growth shows is countries that have not recovered as well as the U.S. from the 2008 recession/financial-crisis, countries that relied on austerity policies when the U.S. relied on a minor stimulus (minor compared to what it should have been). It is also necessary to take the gdp base into account - growth from nothing is faster than growth from prosperity.
Funny, because he attributes Spain's higher growth compared to Germany, France, Italy etc. to Spain's recent labor & tax reforms, yet Spain's growth edge over those countries has narrowed greatly since the 2008 recession and Germany and France are growing faster than before the recession, whereas Spain is not.
Funny, because French businessmen with megaphones in the streets is not news - someone in France is always demonstrating about something including many things Ratter is against.
Funny, because previously "sensible" Germany has supported solar and other renewable energy for many many years, so any move more in that direction is more of the same.
And funny because immigration is not just a labor supply issue but a demand for goods issue which Rattner ignores.
Reforms are needed but Rattner's familiar arguments don't support his familiar solution.
Funny, because what the graph of growth shows is countries that have not recovered as well as the U.S. from the 2008 recession/financial-crisis, countries that relied on austerity policies when the U.S. relied on a minor stimulus (minor compared to what it should have been). It is also necessary to take the gdp base into account - growth from nothing is faster than growth from prosperity.
Funny, because he attributes Spain's higher growth compared to Germany, France, Italy etc. to Spain's recent labor & tax reforms, yet Spain's growth edge over those countries has narrowed greatly since the 2008 recession and Germany and France are growing faster than before the recession, whereas Spain is not.
Funny, because French businessmen with megaphones in the streets is not news - someone in France is always demonstrating about something including many things Ratter is against.
Funny, because previously "sensible" Germany has supported solar and other renewable energy for many many years, so any move more in that direction is more of the same.
And funny because immigration is not just a labor supply issue but a demand for goods issue which Rattner ignores.
Reforms are needed but Rattner's familiar arguments don't support his familiar solution.
84
I totally agree with you. Furthermore, that graph includes only countries in Europe which have adopted the Euro, and cherry picks countries like Portugal, Spain, Ireland, Greece and Italy whose currencies and purchasing power fared VERY poorly against the Euro upon adoption and in the early years of adjustments to the currency. That graph is not especially helpful - the majority of the increase is due to the Euro. Everyone in Italy knows that no one is doing better in terms of salaries now than they were in 2000. A decent salary of 2M lire in 2000-2001 became a paltry 1,000 euro per month in 2002. Commodity prices, however, doubled (i.e. a 1,000 lire piece of mozzarella became a 1 euro piece of mozzarella).
1
Insightful piece by Mr. Rattner. In the next decade, he will probably be writing a similar piece about the U.S.
With the exception of inflexible labor markets, we face similar structural challenges. Our themes will likely be:
- High entitlement spending (coupled with worker/retiree ratios going the wrong way)
- An under-skilled workforce (We do a great job with the top 20%, its the other 80% where we fall down. Our immigration policies also make it difficult for the best and brightest from abroad to stay in the U.S.)
- Capital flight (Real, substantive tax reform. Think consumption or flat-tax for personal income taxes)
The linchpin is overhauling campaign finance. Until all federal and state elections are publicly funded and reasonable term limits are implemented, there will be no political courage to tackle any of these issues.
I fear we will soon be reading another "insightful piece" by Mr. Rattner.
With the exception of inflexible labor markets, we face similar structural challenges. Our themes will likely be:
- High entitlement spending (coupled with worker/retiree ratios going the wrong way)
- An under-skilled workforce (We do a great job with the top 20%, its the other 80% where we fall down. Our immigration policies also make it difficult for the best and brightest from abroad to stay in the U.S.)
- Capital flight (Real, substantive tax reform. Think consumption or flat-tax for personal income taxes)
The linchpin is overhauling campaign finance. Until all federal and state elections are publicly funded and reasonable term limits are implemented, there will be no political courage to tackle any of these issues.
I fear we will soon be reading another "insightful piece" by Mr. Rattner.
10
gee it is already here, too many people, too few competent, and a government that thinks that entitlement is better than opportunity. Plenty of retired folks know stuff and could work but we have illegals instead.
If we do great with the top 20%, why do we need to do a better job with those abroad? How do regressive tax schemes like a consumption tax improve the economy other than giving the top bracket a huge tax cut?
Yeah, term limits. There's a fine solution to...exactly what problem does it solve again?
We've got a term limited legislature in Michigan, and a greater bunch of uneducated dolts would be hard to find.
If a maximum of six years of experience is so great, would you want it for your pilot; for the surgeon operating on your kid; on the lawyer defending you from a capital charge?
I know we are Americans, and thus supposed to fall for any idea the right wing puffs up with advertising money, but "term Limits". ..? That one is an absurd sale to voters watching inexperienced dim bulb legislators wrestle with financing schools and roads, and losing the match, year after year.
We've got a term limited legislature in Michigan, and a greater bunch of uneducated dolts would be hard to find.
If a maximum of six years of experience is so great, would you want it for your pilot; for the surgeon operating on your kid; on the lawyer defending you from a capital charge?
I know we are Americans, and thus supposed to fall for any idea the right wing puffs up with advertising money, but "term Limits". ..? That one is an absurd sale to voters watching inexperienced dim bulb legislators wrestle with financing schools and roads, and losing the match, year after year.
1
Mr. Rattner overlooks the obvious point that many of the features he abhors in Europe are what make its societies appealing to its citizens. Job security and worker welfare protections pay dividends in leisure time, better health, and better childhood conditions. Higher tax rates then the US pay for an array of benefits, including better transit, cleaner streets, universal health care and higher education, and substantial poverty relief.
The arrangements and outcomes vary with national borders, but in many cases these policies have led to healthier, happier, richer, and even economically wealthier populations then in the US. (Mr. Rattner’s chart and comments cite the weakest EU economies, excluding the states doing much better that mostly have similar policies in place.)
There is no one-size-fits-all answer to these social and economic issues; it is an affair of trade-offs, but also of finding the best solution for your unique circumstance. Jettisoning their own values for our US framework of low taxes, low regulation, inadequate services, high poverty, corporate immunity, and an imploding middle class isn’t reform – it’s merely trading one set of difficult challenges for a different set.
No doubt Europeans could learn something from the way we do things in the US, as we can learn from the way they do things. But given our own problems achieving sustainable growth, Mr. Rattner ought to show a bit more respect and humility regarding other people’s choices.
The arrangements and outcomes vary with national borders, but in many cases these policies have led to healthier, happier, richer, and even economically wealthier populations then in the US. (Mr. Rattner’s chart and comments cite the weakest EU economies, excluding the states doing much better that mostly have similar policies in place.)
There is no one-size-fits-all answer to these social and economic issues; it is an affair of trade-offs, but also of finding the best solution for your unique circumstance. Jettisoning their own values for our US framework of low taxes, low regulation, inadequate services, high poverty, corporate immunity, and an imploding middle class isn’t reform – it’s merely trading one set of difficult challenges for a different set.
No doubt Europeans could learn something from the way we do things in the US, as we can learn from the way they do things. But given our own problems achieving sustainable growth, Mr. Rattner ought to show a bit more respect and humility regarding other people’s choices.
87
Great points and with acceptance of some of the societal benefits comes the bad parts. To each his own in Europe and in each state, one size for many of these things is inappropriate. Let the market in the US decide it is the best for us.
I'm not sure how you can argue about the 'pros' to the entitlement society when unemployment is 23% in a country, and far worse for the young. It is plain and simple a transfer of wealth from the young and working to the old and not working, exactly the opposite of how families have operated for hundreds of years. Europe has simply bought forward their luxuries on the back of their children; it's decline is completely inevitable.
"with wages continuing to rise even as the efficiency of workers has stagnated"
Here in the US, efficiency has continued to rise while wages have fallen. That is not better.
"More positively, Spain, while still plagued by an unemployment rate of 23.7 percent, has managed to implement labor and tax reforms, helping the country to begin adding jobs again amid renewed economic growth.
"More positive" is not lowering taxes on the wealthy while lowering wages for the working people. That is ongoing recession for everyone but the wealthy, like here.
Spain may have bottomed out, but it would require more than correllation in time to prove that it bottomed out because all this was handed to the "job creators."
Here in the US, efficiency has continued to rise while wages have fallen. That is not better.
"More positively, Spain, while still plagued by an unemployment rate of 23.7 percent, has managed to implement labor and tax reforms, helping the country to begin adding jobs again amid renewed economic growth.
"More positive" is not lowering taxes on the wealthy while lowering wages for the working people. That is ongoing recession for everyone but the wealthy, like here.
Spain may have bottomed out, but it would require more than correllation in time to prove that it bottomed out because all this was handed to the "job creators."
6
I'm so tired of hearing the same leitmotif of 'labour rigidity' spewed by so-called experts who only know Europe and especially France from the comfort of an American armchair and statistics.
Come and live here for 35 years, learn the language, immerse yourself in the culture and then you'll learn that most of what you are stating is pure hogwash. Yes, France has strong labor laws that on paper would scare away any Anglo-American entrepreneur. You'll learn rather quickly, however, once you've gotten to know the country, rules in France are made to be either get around or ignored. Only in the big companies are labor laws respected because of the power of trade unions there. In many small or medium sized companies where unions are almost non-existant laws are repeated violated with impunity. Of course, employees can have recourse to labor courts but cases usually take about 8 to 10 years to be tried and by then you have most likely been fired.
Actually labor flexibility exists legally with the boom of short term contracts and temporary work.
The real problem in France and Europe in general is not labor inflexibility but social rigidity with the best places in business and government preserved for the sons and daughters of the elite and a whole educational system based on reproducing this elite. Unfortunately, the United States seems to be on the verge of copying the most negative aspect of European society and we might see the same stagnation there in the next decade.
Come and live here for 35 years, learn the language, immerse yourself in the culture and then you'll learn that most of what you are stating is pure hogwash. Yes, France has strong labor laws that on paper would scare away any Anglo-American entrepreneur. You'll learn rather quickly, however, once you've gotten to know the country, rules in France are made to be either get around or ignored. Only in the big companies are labor laws respected because of the power of trade unions there. In many small or medium sized companies where unions are almost non-existant laws are repeated violated with impunity. Of course, employees can have recourse to labor courts but cases usually take about 8 to 10 years to be tried and by then you have most likely been fired.
Actually labor flexibility exists legally with the boom of short term contracts and temporary work.
The real problem in France and Europe in general is not labor inflexibility but social rigidity with the best places in business and government preserved for the sons and daughters of the elite and a whole educational system based on reproducing this elite. Unfortunately, the United States seems to be on the verge of copying the most negative aspect of European society and we might see the same stagnation there in the next decade.
15
I actually lived and worked in France as an expat, and loved it, but much of what Rattner says applies to France I'm afraid. It's by no means the worst exemplar of the problems he describes but I'm afraid you're going to have to do better than just dismiss his arguments as statistics delivered from an armchair.
2
And btw the US has lower social mobility than France so it appears that the prevalence of armchairs is not confined to the US.
Sorry but it was the EU austerity that killed these countries after the housing market crashed.
15
Our economists don’t know how to calculate the real GDP.
The gross domestic program is not a simple sum of everything our businesses create, but such a sum reduced for the amount of debt we accrued during the same period.
It means we cannot use the colossal budget deficits to fool ourselves that we are doing great. We have to reduce our output for what we borrowed.
That’s how our banks calculate our credit worthiness. They reduce our total income for the amount of the debt obligations to calculate our real disposable income.
Even if our income stayed the same, the banks know we are less reliable if we cannot control our spending and debt.
The same should be valid for the GDP if we wanted to accurately assess our economic course...
The gross domestic program is not a simple sum of everything our businesses create, but such a sum reduced for the amount of debt we accrued during the same period.
It means we cannot use the colossal budget deficits to fool ourselves that we are doing great. We have to reduce our output for what we borrowed.
That’s how our banks calculate our credit worthiness. They reduce our total income for the amount of the debt obligations to calculate our real disposable income.
Even if our income stayed the same, the banks know we are less reliable if we cannot control our spending and debt.
The same should be valid for the GDP if we wanted to accurately assess our economic course...
1
Where did you learn economics? Gross Domestic Product is the sum of the value added in the economy. It says nothing about the well-being of individuals, their happiness, etc. Government debt is not identical to private sector debt; or, to state and local government debt.
1
Dismal,
did you learn the economics from the same people who claimed the housing bubble wasn't real?
Do you know when I predicted the housing bubble?
In 2003...
Nobody thought me that economic lesson. I just used the basic mathematical operations like adding and deducting...
did you learn the economics from the same people who claimed the housing bubble wasn't real?
Do you know when I predicted the housing bubble?
In 2003...
Nobody thought me that economic lesson. I just used the basic mathematical operations like adding and deducting...
"The gross domestic program is not a simple sum of everything our businesses create, but such a sum reduced for the amount of debt we accrued during the same period."
Wouldn't that be the "net" domestic product? Once you start reducing things, they are no longer "gross."
Wouldn't that be the "net" domestic product? Once you start reducing things, they are no longer "gross."
The American problem aren’t the workers but the big businesses and global corporations. They are completely detached from reality.
The idea of exporting the American manufacturing and industries overseas is suicidal in nature. Of course, they can produce the goods cheaper in China, but that’s irrelevant.
The important part is what China is going to buy from us for the trade to be sustainable. If China won’t buy anything from us because everything can be made cheaper overseas, then the free trade concept is unsustainable in the long term.
Of course, for a couple of decades we will be able to exploit our old glory and run the chronic budget deficits thus enlarging the national debt to pay for equally chronic trade deficits. But at certain point in the future after China develops enough by stealing our industrial base, they will refuse to trade any longer with the US because it will not be in their best interest. Why would they give us the goods for free if they aren’t getting anything in return?
At that moment, all those foreign countries keeping their monetary reserves in the US dollars will rid of them, thus creating the colossal inflation here at home.
It means we will have the perfect storm – stranded without the domestic manufacturing with a surplus of cheap dollars.
That’s what greed does to us - make us blind and unable to see that our very policies are hurting us the most. We let Beijing control our destiny by exporting our manufacturing...
The idea of exporting the American manufacturing and industries overseas is suicidal in nature. Of course, they can produce the goods cheaper in China, but that’s irrelevant.
The important part is what China is going to buy from us for the trade to be sustainable. If China won’t buy anything from us because everything can be made cheaper overseas, then the free trade concept is unsustainable in the long term.
Of course, for a couple of decades we will be able to exploit our old glory and run the chronic budget deficits thus enlarging the national debt to pay for equally chronic trade deficits. But at certain point in the future after China develops enough by stealing our industrial base, they will refuse to trade any longer with the US because it will not be in their best interest. Why would they give us the goods for free if they aren’t getting anything in return?
At that moment, all those foreign countries keeping their monetary reserves in the US dollars will rid of them, thus creating the colossal inflation here at home.
It means we will have the perfect storm – stranded without the domestic manufacturing with a surplus of cheap dollars.
That’s what greed does to us - make us blind and unable to see that our very policies are hurting us the most. We let Beijing control our destiny by exporting our manufacturing...
5
Mr. Rattner advocates allowing European companies more freedom in "reducing head counts" — presumably with the guillotine.
7
I much prefer the goal of improving the standard of living for the working class to further increasing their burden with ever greater giveaways to business. Free market principles have become so distorted and dominant that corporations are people and money is speech and wages are flat while wealth accumulates at the top.
Economic growth and stability are important, but not as important as promoting the general welfare. Otherwise, we have totalitarian capitalism where government acts to favor business at the expense of the people.
Economic growth and stability are important, but not as important as promoting the general welfare. Otherwise, we have totalitarian capitalism where government acts to favor business at the expense of the people.
11
It’s clear that these charts reflect the classic capital vs. labor dichotomy – when laws and regulations heavily favor the former as in the U.S. we get growth at the expense of equality and when they heavily favor the latter as in much of Europe we don’t. The key is do these laws and regulations that heavily favor labor start inhibiting the Gross National Happiness index as opposed to only GDP? If yes, the question becomes what actions must Europe take to reconcile labor, equality and happiness?
There are no easy answers to that question, but Mr. Rattner is fundamentally right, in that; Europe’s problems are beyond those that can now be fixed by simply tinkering with monetary policy. Besides, its quantitative easing might be too little, too late – reversing monetary austerity without commensurate “policy changes, such as keeping top tax rates at sensible levels and regulatory reforms that would give companies more freedom to manage their businesses as they see fit” would be tantamount to pushing on a string, i.e., the growth string.
Frankly, the fiscal policy pendulums in the U.S. and Europe are on opposing ends of the global economic clock – both need to move a little more towards the center.
There are no easy answers to that question, but Mr. Rattner is fundamentally right, in that; Europe’s problems are beyond those that can now be fixed by simply tinkering with monetary policy. Besides, its quantitative easing might be too little, too late – reversing monetary austerity without commensurate “policy changes, such as keeping top tax rates at sensible levels and regulatory reforms that would give companies more freedom to manage their businesses as they see fit” would be tantamount to pushing on a string, i.e., the growth string.
Frankly, the fiscal policy pendulums in the U.S. and Europe are on opposing ends of the global economic clock – both need to move a little more towards the center.
2
If you like plutocracy, you will love this column. Mr. Ratner misses the point of these laws, which were passed to prevent abuses by the corporacracy.
10
What too embarrassed to show the U.S. productivity versus declining wages graph. Our GDP is growing rapidly and every penny going to the capitalists. Maybe workers in Europe get too large a share of the pie, or not, but American workers haven't been allowed anywhere near the bakery for 35 years.
17
Thank you Mr Rattner. Excellent article. Would you mind having a little sit down talk with Krugman and explain all of this to him?
1
The vest-and-pocket-watch crowd in the boardroom would like to squeeze workers like lemons for their last drop of labor juice.
There's gotta be a better way.
There's gotta be a better way.
9
A Wall Street financier talking about the responsibilities and imperatives of labor is akin to a fox demanding access to the hen house.
"Archaic restrictions on hiring and firing workers.." were enacted in the first place to deny the retrograde policies of a neo-feudal operative like Rattner.
"Archaic restrictions on hiring and firing workers.." were enacted in the first place to deny the retrograde policies of a neo-feudal operative like Rattner.
16
My conclusion from this article is that getting rich on Wall Street doesn't require much analytic expertise but does require the ability to deceive.
Erroneous Analytics: Increasing unit labor costs may reduce profitability. But, reduced profits are not a measure of reduced competitiveness. It means the share of revenues kept by owners/stockholders has declined. Competitiveness could increase. For example, compare the competitiveness of CostCo to Target in the U.S. in recent years. CostCo pays workers three times what Target does. It's unit labor costs are much higher. Until the past few years, CostCo's profits were lower. Now you could safely conduct shopping cart races through most Target stores but you can hardly move your shopping cart in most CostCo stores.
Deception?: Why does Mr. Rattner not show us statistics for members of the European Union like Denmark, Sweden, and the Netherlands? Could it be because they have very high labor costs, are very competitive and enjoy higher standards of living than the average American?
Erroneous Analytics: Increasing unit labor costs may reduce profitability. But, reduced profits are not a measure of reduced competitiveness. It means the share of revenues kept by owners/stockholders has declined. Competitiveness could increase. For example, compare the competitiveness of CostCo to Target in the U.S. in recent years. CostCo pays workers three times what Target does. It's unit labor costs are much higher. Until the past few years, CostCo's profits were lower. Now you could safely conduct shopping cart races through most Target stores but you can hardly move your shopping cart in most CostCo stores.
Deception?: Why does Mr. Rattner not show us statistics for members of the European Union like Denmark, Sweden, and the Netherlands? Could it be because they have very high labor costs, are very competitive and enjoy higher standards of living than the average American?
22
Depends on the goal. Do we run our nation in order to "enjoy higher standards of living" or to "maximize profit return on investment?"
4
Every country or continent has its own problems are particularities. While some of the critique Mr Rattner levels against the European countries is justified, it is misleading, to say the least, to omit saying that productivity per hour worked in Europe is about at par with productivity per hour worked in the USA.
4
Perhaps Europe simply rejects the form of runaway capitalism now consuming the US. In Europe power is held by the people, whereas in the US power seems to be increasingly held by the corporations. Europe is not going to accept the corruption of democracy as seen in the US.
16
It is not about rejecting "runaway capitalism" as you suggest. Europe unfortunately has the tendency to believe in collectivist pipe dreams in which all you have to do is take from the "rich" and give to the "poor". Leaving aside that most politicians don't bother to elaborate on who exactly they are targeting, except maybe to pronounce that it certainly is not you, my poor dear voter, the basic law of taxation has always been: take it from where you can get it. And that means that such plans almost always end up hitting the middle class, i.e. the people who do not have the resources to "optimize" their income in tax terms or to move away to a different country.
Just imagine if the big banks treated us in the same way our government treats our economy. That would be the paradise on Earth!
Imagine if in addition to your regular income you borrowed heavily and spend heavily. If the banks treated you as a national economy, the banks would conclude that you increased your real income by borrowing heavily, thus entitling you to even more borrowing power.
The more you borrow, the bigger your income, so you should be entitled to borrow even more based on your income...
If you think that such an approach would be completely insane, ask your federal government why it calculates our national GDP in such a way...
The more Washington D.C. borrows, the more it increases our GDP and the increase of the GDP entitles the Congress to borrow even more...
It isn’t real at all but it sounds great!
Imagine if in addition to your regular income you borrowed heavily and spend heavily. If the banks treated you as a national economy, the banks would conclude that you increased your real income by borrowing heavily, thus entitling you to even more borrowing power.
The more you borrow, the bigger your income, so you should be entitled to borrow even more based on your income...
If you think that such an approach would be completely insane, ask your federal government why it calculates our national GDP in such a way...
The more Washington D.C. borrows, the more it increases our GDP and the increase of the GDP entitles the Congress to borrow even more...
It isn’t real at all but it sounds great!
How does the long time stagnant income of U>S> workers factor in this analysis?
8
Have businesses really earned the right to lighter regulation? Give business a cutoff point, say 30 hours work earns medical coverage, and all of a sudden, everyone is working 29 hours, while business clamors for a 40 hour cutoff point. Leave business on its own, and you get phone trees for customer service, airline seats which are, ...airline seats, and an internet that allows Netflix and Amazon to fly through, while the rest of us buffer. Not to mention banks and their imitators. Let's hear it for regulation, at least until business "improves."
7
Regulation is necssary, no doubt. However, certain regulations and practices give the wrong incentives. Consider for example that in an Italian labor dispute a court ruled that destruction of machinery was a valid form of protest that may not be countered by firing the perpetrators. Do you wonder why Fiat essentially departed from its home country?
Mr Rattner has missed two factors holding back productivity in Europe: labour mobility and education. Many professionals--architects, doctors, academics--face surprising obstacles if they move from one EU country to another. Couple that with national school systems that do little to accommodate the children of workers who have moved from elsewhere in the EU: much of Europe is well behind the US and Canada in heritage-language teaching and dual-language education. When pushed, these sorts of workers often head home after four or five years to ensure their children get the secondary education, and university education, they know and trust. There are exceptions: Helsinki, Berlin, and Vienna are good at attracting and retaining foreign talent, and France has a national strategy for incoming highly skilled EU workers. But many EU member states do their best to stay closed to talent from elsewhere in the EU, particularly where public money flows.
20
"Many professionals--architects, doctors, academics--face surprising obstacles if they move from one EU country to another."
That is also true of professional licensing in the US when moving between states. It hasn't hurt us.
It is more reasonable in Europe than in the US, because in Europe language barriers would impact many professions.
That is also true of professional licensing in the US when moving between states. It hasn't hurt us.
It is more reasonable in Europe than in the US, because in Europe language barriers would impact many professions.
2
Good point. There is a bit of a myth in North America that Europeans are all multi-lingual and highly educated compared to us.
Yes the EU is a collection of countries, not a band of states such as the US has. Their cultural differences are very wide and tolerance is not that great.
The economic development of a nation is closely related to its culture and historical evolution. The dilemma of EU is, it is trying to prescribe one medicine for diverse nations. This is causing the distress in all member states. Spain, Italy, Portugal and Greece are countries with strong MSE and less developed for multinational corporations, where as multinational corporations are strong in Germany, France and UK. Implications of labour laws and cost of capital on these sectors are different. Also saving patterns are different in these countries. Normally 25% of saving rates are directly converted to GDP growth. Thus the attempt of ECB to prescribe one solution to fit all these diverse nations will make all of them unhappy. Similarly, one template of labour laws is not solutions of all these nations - EU nations should find out the right labour law frame work to make their respective MSE and large corporate efficient. Protecting the union rights of large corporations that produce small amount of GDP and hurting the MSE that produce large amount of GDP and employment will be sucidal to a nation.
Labour reform = turning the clock back to hard times, everybody except the carpet baggers lose out.
In the US a fast food burger worker needs two jobs to feed , clothe and shelter the family
In western Europe, a fast food worker flipping burgers has all those things, plus, full health insurance and can sent their children through college and higher education.
Sounds nice 'regulatory reform, reform' such a sweet sounding word.
Any chance that the likes of Apple and Nike bring back production to the US, now that all the regulatory reforms, closing plants and reducing head counts have been implemented?
In the US a fast food burger worker needs two jobs to feed , clothe and shelter the family
In western Europe, a fast food worker flipping burgers has all those things, plus, full health insurance and can sent their children through college and higher education.
Sounds nice 'regulatory reform, reform' such a sweet sounding word.
Any chance that the likes of Apple and Nike bring back production to the US, now that all the regulatory reforms, closing plants and reducing head counts have been implemented?
7
The graph here should be compared to a graph Paul Krugman recently displayed, showing the rise in median wages in various European countries compared to the flatlining of median wages in the US. While the US has done better by the rich, Europe has done better by the middle class. Measuring the whole pie, when most of it is eaten by the rich, should be compared to measuring the size of the slices enjoyed by the majority of each nation's population. By the latter measure, Europe comes out well, despite the damage wrought by austerity policies as well as the restrictions of regulations - and to the credit of some of those regulations. The middle class in Europe is better of than they were a decade ago; in the US, worse.
8
Mr. Ratner's piece tells us a lot about what's wrong with the current crop of American business leaders. He castigates European governments for enforcing measures that allow their workers to benefit from productivity gains by receiving higher wages. According to Mr. Rattner, such policies are "anti-business".
The same argument could be made against the repeal of slavery. Was that also "anti-business", Mr. Rattner? Your arguments sound a lot like class warfare to me.
The same argument could be made against the repeal of slavery. Was that also "anti-business", Mr. Rattner? Your arguments sound a lot like class warfare to me.
7
Forgive me for saying so, but at this point in time, I find it very hard to take the advice from anyone connected to Wall Street anymore, whether it's about Europe or the US. "Anti-business" overall comes from those that haven't seen any kind of real contribution from those with the wealth to turn things around to better those without it.
12
In his prescription for economic growth, Mr. Rattner reminds me of the physician who writes prescriptions just for himself while letting his patients, the source of his income, get sicker by the day. Charts on economic growth mean little when all the growth in the U.S. economy goes to Mr. Rattner and his pals at the top. At least Europeans get to share in the growth of their economies.
8
I don't believe for a minute your story that allowing corporations to exploit workers is the key to increased productivity. I see that you were unable to come up with any actual evidence for this claim, and therefore resorted to the standard tactic of stating it forcefully, without backing it up, to try to make it something that "everyone knows".
15
Rattner omitted the Scandinavian countries from his "Losing Competitiveness" chart. Wonder why...
8
Perhaps it's because Finland has the GDP of Tennessee--and Finland, Norway and Sweden combined have smaller economies than New York State.
To take small, well-educated, almost homogeneous (white) countries--and try to use them to make a point is essentially useless. As an example, take Norway. A huge part of their economy is tied to the oil industry. Do you think that skews the scale of their economic well-being?
To take small, well-educated, almost homogeneous (white) countries--and try to use them to make a point is essentially useless. As an example, take Norway. A huge part of their economy is tied to the oil industry. Do you think that skews the scale of their economic well-being?
1
Jesse, you're as guilty of cherrypicking as Rattner.
The title of Rattner's propagandistic opinion piece is "Europe's Anti-Business Attitude." "Europe's," not "Certain European Countries that Have GDP Above X, Have Populations Above Y, and are Diverse to the Degree of Z."
The average reader expects to see charts with averages in addition to charts with break-outs. Rattner took the low road in carefully picking the best cherries to demo his argument.
Your argument would hold better if Rattner hadn't included Ireland, population 4.6 mil vs. Finland's pop. of 5.4 and Denmark's 5.6
I'm in agreement with the thrust of Rattner's thesis that doing business in Europe is difficult due to higher social costs than we experience in the U.S., but he remains guilty of loading his charts with hand-picked cherries.
The title of Rattner's propagandistic opinion piece is "Europe's Anti-Business Attitude." "Europe's," not "Certain European Countries that Have GDP Above X, Have Populations Above Y, and are Diverse to the Degree of Z."
The average reader expects to see charts with averages in addition to charts with break-outs. Rattner took the low road in carefully picking the best cherries to demo his argument.
Your argument would hold better if Rattner hadn't included Ireland, population 4.6 mil vs. Finland's pop. of 5.4 and Denmark's 5.6
I'm in agreement with the thrust of Rattner's thesis that doing business in Europe is difficult due to higher social costs than we experience in the U.S., but he remains guilty of loading his charts with hand-picked cherries.
Jesse:
What does the reference to "white" mean? Are so-called white citizens categorically different than "other" citizens.
Please explain.
What does the reference to "white" mean? Are so-called white citizens categorically different than "other" citizens.
Please explain.
Have you ever wondered how we hit the Great Depression in 1928? Have you ever wondered how we ended up in the Great Recession and the housing bubble of 2007?
The answer is more than simple. We kept lying to ourselves and ignored reality for a prolonged period of time. Eventually we couldn’t pretend any longer that there was no wall in front of us because it hit us in the face with the full force and bloodied our noses and shattered our teeth.
We should have blamed ourselves for being stupid and dishonest.
The same is happening all over again.
When we glance at this chart indicating that over the last 14 years we have increased our gross domestic project for 28% after adjusting it for inflation, we know that whoever put that graph together was completely detached from a real life. The point of graph is to assure us that we are doing great and should continue at full speed forward. Any problem? Well, there is that stupid wall in front of us or if you are a fan of “Titanic” movie, a gigantic iceberg waiting on us...
Have you ever wondered what is completely false, the stupid chart or the $18 trillion national debt? If we truly increased our GDP for 28% we would be able to balance the budgets and pay off the national debt.
The chart illustrates an increase in US GDP of 28% only because it counts a spike of $12 trillion in our national debt as the key part of the GDP...
The real data would tell us the chronic trade deficits make us poorer...
The answer is more than simple. We kept lying to ourselves and ignored reality for a prolonged period of time. Eventually we couldn’t pretend any longer that there was no wall in front of us because it hit us in the face with the full force and bloodied our noses and shattered our teeth.
We should have blamed ourselves for being stupid and dishonest.
The same is happening all over again.
When we glance at this chart indicating that over the last 14 years we have increased our gross domestic project for 28% after adjusting it for inflation, we know that whoever put that graph together was completely detached from a real life. The point of graph is to assure us that we are doing great and should continue at full speed forward. Any problem? Well, there is that stupid wall in front of us or if you are a fan of “Titanic” movie, a gigantic iceberg waiting on us...
Have you ever wondered what is completely false, the stupid chart or the $18 trillion national debt? If we truly increased our GDP for 28% we would be able to balance the budgets and pay off the national debt.
The chart illustrates an increase in US GDP of 28% only because it counts a spike of $12 trillion in our national debt as the key part of the GDP...
The real data would tell us the chronic trade deficits make us poorer...
1
A rather fact free, neo-liberal memes filled column, that may "avoid" simplicity, but fails to acknowledge that the primary problem in Europe since 2010 has been lack of demand. For "uncompetitive" economies, the EUROZONE as a whole had a 2 Trillion Euro trade surplus in November 2014. http://www.tradingeconomics.com/euro-area/balance-of-trade. Germany has a trade surplus equal to 6% of its GDP.
Also, the chief difference between U.S. GDP and the EUROZONE is the U.S. had more stimulus, both monetary and fiscal, and far less austerity since the 2007-08 crisis, an argument supporting "simplicity" of boosting aggregate demand.
Finally, the neo-liberal proposals at the end of the column (low income tax rates, "regulatory reforms" to allow businesses to "close plants and reduce head counts" would of course further depress private demand and incomes, putting more downward pressure on growth, with no off-setting public spending. Forgets to insert the phrase "then presume a unicorn" before "viable path to sustainable growth, and ultimately more jobs." But Rattner's proposals are certainly good for concentrating more money and power in Europe's 1%.
Also, the chief difference between U.S. GDP and the EUROZONE is the U.S. had more stimulus, both monetary and fiscal, and far less austerity since the 2007-08 crisis, an argument supporting "simplicity" of boosting aggregate demand.
Finally, the neo-liberal proposals at the end of the column (low income tax rates, "regulatory reforms" to allow businesses to "close plants and reduce head counts" would of course further depress private demand and incomes, putting more downward pressure on growth, with no off-setting public spending. Forgets to insert the phrase "then presume a unicorn" before "viable path to sustainable growth, and ultimately more jobs." But Rattner's proposals are certainly good for concentrating more money and power in Europe's 1%.
7
There's a lot to quibble with on both sides of the political spectrum (as the comments reveal), but you cannot deny a basic fact: hiring policies and business start-up rules in other countries are often absurd. This piece, about driver's education companies in France, is just one example: http://www.nytimes.com/2014/08/24/world/europe/a-driving-school-in-franc...
17
A recent NY Time article pointed out the dramatic increase in licensing regulations and requirements for various professions in the US - from taxi services to dentists to veterinarians and those who file horses' teeth. The driving factors seemed to be a combination professionals that want barriers so their compensation can stay high and state or local governments that want the related licensing fees. While we've seen substantial decline in organized labor through traditional unions in the US, perhaps this is being replaced partly through "organized professionals (licensing) ... and we certainly have "organized ownership" as part of the mix - in the form of shareholders and investors in public companies. In Europe, organized labor seems still be working through federal legislation and restrictions.
It's not surprising to see there are different ways that individuals with similar self-interests will try to organize to their benefit. Exactly how will continue to vary by country and region in the context of (sorta) free markets + (sorta) democratic government.
It's not surprising to see there are different ways that individuals with similar self-interests will try to organize to their benefit. Exactly how will continue to vary by country and region in the context of (sorta) free markets + (sorta) democratic government.
Not to mention the use of the government to protect the wealthy cab owners from competition. Now reasonable regulation for safety or other reasons is good to protect those who can pay from competition not so much.
You've got to admire the folks on Wall Street: Never let a recession go to waste when you can use it to argue for deregulation. Since Rattner cited only the more outlandish regulations, it's hard to know just how significant red tape is in holding back European growth. We only have to look at the lessons of 2007 and the tens of thousands of Americans tossed out of work by outsourced work and mergers to see the benefits of unfettered capitalism. But does Rattner really believe that putting European workers at the complete mercy of market fluctuations beyond their control is the answer to their stagnant economy? Nothing in his column refutes the fact that inflexible austerity policies have made it nearly impossible for countries like Greece and Spain to climb out of their economic canyons. Ultimately, businesses aren't going to hire people unless there's a demand for their goods. That's not going to happen until governments are freed to pump up their economies rather than being forced to drain them.
113
I think he's talking about something different than what you're addressing. I can tell you two stories from my own experience: I started a small business with a couple of partners here in the US. It took about 15 minutes to have the company established and registered with the state, get a taxpayer ID from the federal and state government, and we set up a bank account in half an hour on the weekend (we all had day jobs).
That same process in France would take six to twelve months. I have set up companies in my day job in Russia, the UK, the Netherlands, Denmark, Luxembourg and a few others. In each place, even the allegedly business friendly places like the UK, the process is a minimum of three months, and a maximum of two years. Compared to a total of 45 minutes in the US.
In a separate anecdote, my company bought a Canadian company that had a French subsidiary. The employees had worked at the company for anywhere from six to 18 months. Although they announced that they wouldn't work for new owners, we were not allowed simply to fire them. We spent hundreds of thousands of dollars consulting with labor lawyers, and then ended paying each employee more than two years' salary to make them go away. And under French labor law, they can still sue us to collect additional amounts. My company closed down its French operations and will not enter that market again.
I think those are the kinds of issues that Mr. Rattner is addressing.
That same process in France would take six to twelve months. I have set up companies in my day job in Russia, the UK, the Netherlands, Denmark, Luxembourg and a few others. In each place, even the allegedly business friendly places like the UK, the process is a minimum of three months, and a maximum of two years. Compared to a total of 45 minutes in the US.
In a separate anecdote, my company bought a Canadian company that had a French subsidiary. The employees had worked at the company for anywhere from six to 18 months. Although they announced that they wouldn't work for new owners, we were not allowed simply to fire them. We spent hundreds of thousands of dollars consulting with labor lawyers, and then ended paying each employee more than two years' salary to make them go away. And under French labor law, they can still sue us to collect additional amounts. My company closed down its French operations and will not enter that market again.
I think those are the kinds of issues that Mr. Rattner is addressing.
2
Nobody that I know of wants unfettered capitalism, but when a couple of boys want to shovel snow and are prevented from doing so by a 500 license it is out of control. I bet Europe has many rules we would not like controlling commerce because we would be inconvenienced.
The situation varies widely (I've lived and worked in three European countries and visited numerous others commercially) which is why it's always a mistake to lump all Europe into one amorphous mass. That said there is no doubt that many countries in Europe are hindered by a mass of employment and regulatory laws, and just as serious, restrictive occupational practices that apply from the highest to the lowest. We won't get into Greece but even places like Italy which is in many ways a very modern and vivacious society can be a nightmare to do business in. Their political system is unbelievable in its size and complexity so the obstacles to change are massive.
13
Just a silly thing, really, but please, Mr. Rattner, come up with a different term to describe workers other than "headcount." Do you realize how offensive that is when you are trying to hold a job, be a loyal employee, and face a layoff? While workers may be just a statistic, i.e. headcount, to those sitting on top floors, it is so infuriating, and hurtful to those of us who equate that term with another word, reduce. It sounds so Mitt Romney.
57
Elitism at its worst.
5
I'm actually surprised to read this op-ed from Steven Rattner, who typically defends the interests of big business in highly practical terms, but doesn't let that get in the way of a decidedly progressive approach to economic governance.
Granted, what he actually writes about the proper focus for necessary European economic transformation has been the received wisdom on the right for a long time -- that it's Europe's highly destructive protectionism of its workforce, along with stultifying bureaucracy and actual corruption that are the prime causal factors to the mess they've created for themselves; but to read him emphasize even the obvious when the truth gores organized interests of labor is ... sobering.
Some will argue that a rationalization of destructively dense labor laws is equivalent to eliminating labor laws, but that's obviously not the case. We protect labor here to an excessive degree but to a far lesser degree than Europeans; but we still protect it.
Perhaps if the obvious has finally been embraced even by the casually progressive, there's a hope that Europe might find a way to make the sacrifices necessary to regain stability and growth.
Granted, what he actually writes about the proper focus for necessary European economic transformation has been the received wisdom on the right for a long time -- that it's Europe's highly destructive protectionism of its workforce, along with stultifying bureaucracy and actual corruption that are the prime causal factors to the mess they've created for themselves; but to read him emphasize even the obvious when the truth gores organized interests of labor is ... sobering.
Some will argue that a rationalization of destructively dense labor laws is equivalent to eliminating labor laws, but that's obviously not the case. We protect labor here to an excessive degree but to a far lesser degree than Europeans; but we still protect it.
Perhaps if the obvious has finally been embraced even by the casually progressive, there's a hope that Europe might find a way to make the sacrifices necessary to regain stability and growth.
3
who's protected? not me...
3
Germany is extremely stable, has high growth and pays its unionized auto workers about $60 an hour before benefits. Benefits that include single payer health care, free child care, free University (in fact students get paid to attend college). Every German company with more than 1000 employees is unionized and they're kicking our butts.
But you keep on about what it takes to be competitive.
But you keep on about what it takes to be competitive.
1
Richard,
Democracy and Adam Smith don't mix, never have never will. America and Canada gave up on democracy in 1980. America is doing well but abandoning our National Energy Program is finally hitting home here in Canada.
Democracy and Adam Smith don't mix, never have never will. America and Canada gave up on democracy in 1980. America is doing well but abandoning our National Energy Program is finally hitting home here in Canada.
1
So much for the myth of the free market: whether markets become fouled by regulations favoring labor or the lack of regualtions favoring business, we should admit that the hidden hand of capitalism is a myth---someone's political hand is always in the free market till.
36
If it is the entire Eurozone that needs to be globally competitive, exchange rates would take care of that. So none of Rattner's points explain unemployment in the Eurozone.
Back to the problem of inadequate demand. The case for fiscal stimulus isn't a simplistic idea, but it seems to be hard for many to grasp. So the case for fiscal stimulus keeps being broken down into simpler and simpler steps, to the point that it is here mistaken for being simplistic.
Great that the US is doing better for those in lofty perches, but it is still anemic and nothing to crow about.
Back to the problem of inadequate demand. The case for fiscal stimulus isn't a simplistic idea, but it seems to be hard for many to grasp. So the case for fiscal stimulus keeps being broken down into simpler and simpler steps, to the point that it is here mistaken for being simplistic.
Great that the US is doing better for those in lofty perches, but it is still anemic and nothing to crow about.
13
And you will see that with the stronger dollar the US will also slide back towards a recession, that after years of QE and still not having spent any money fixing its dismal infrastructure.
2
Ah yes, the mournful wail of "anti-business" goes up when the ruling elite (in this case, a Wall Street financier) regard places that favor labor interests. The graphs alone say all you need to know.
Under "Losing Competitiveness" we see a graph in which compensation and productivity track each other pretty well over 14 years, except for Portugal, Greece, and Italy. The US is not in the graph, because that would show a soaring increase in productivity matched by a drop in compensation. That is what "pro-business" looks like.
Under "US Zooms Ahead" we see GDP figrues in isolation. Omitted from the graph -- or the text of the article -- is any discussion of the state of the American worker, whose compensation has remained stagnant for decades and actually dropped in recent years, who have difficulty getting health benefits and meeting health care costs in our privatized scam of a system; who are entitled to no maternity leave; who have minimal, if any, vacation days annually; who are not represented by unions; whose rights are protected by fewer and fewer laws; and who has seen 95% of the profits since 2009 go to 1% of the population. That, too, is what "pro-business" looks like.
Rattner's program has been implemented here, in the USA. It has led to economic ruin for millions, a shrinking middle class, and the rise of the new feudalism.
If "anti-business" is about combating that constellation of misery, I am all for it.
Under "Losing Competitiveness" we see a graph in which compensation and productivity track each other pretty well over 14 years, except for Portugal, Greece, and Italy. The US is not in the graph, because that would show a soaring increase in productivity matched by a drop in compensation. That is what "pro-business" looks like.
Under "US Zooms Ahead" we see GDP figrues in isolation. Omitted from the graph -- or the text of the article -- is any discussion of the state of the American worker, whose compensation has remained stagnant for decades and actually dropped in recent years, who have difficulty getting health benefits and meeting health care costs in our privatized scam of a system; who are entitled to no maternity leave; who have minimal, if any, vacation days annually; who are not represented by unions; whose rights are protected by fewer and fewer laws; and who has seen 95% of the profits since 2009 go to 1% of the population. That, too, is what "pro-business" looks like.
Rattner's program has been implemented here, in the USA. It has led to economic ruin for millions, a shrinking middle class, and the rise of the new feudalism.
If "anti-business" is about combating that constellation of misery, I am all for it.
137
I think the Greeks and then the Spaniards are about to teach Mr Rattner a lesson about ignoring the rightful needs of ordinary workers and the limits of the demands of the holy markets: welcome to the real world Mr Rattner!
3
Amazing how the most popular posters here favor the economic chains that shackle economic growth in near socialist terms!
5
Indeed the shackles come from Wall Street creating wasteful bubbles and busts creating bailouts to be carried by the 99%.
4
What is the purpose of economic growth? Is it not to increase people's well-being? Is economic policy a tool to serve human need, or is it the other way around for you?
Economic growth that doesn't increase the number of citizens whose material and spiritual needs are being met is pointless. Economic growth that achieves this by eating its own seed corn in terms of environmental degradation is a self-destructive.
Dispense with the purple prose ("chains" and "shackles"? Really?) and name calling and make a persuasive case that unregulated economic growth will deliver those benefits while avoiding those unacceptable costs and then you will be debating rather then sniping.
Economic growth that doesn't increase the number of citizens whose material and spiritual needs are being met is pointless. Economic growth that achieves this by eating its own seed corn in terms of environmental degradation is a self-destructive.
Dispense with the purple prose ("chains" and "shackles"? Really?) and name calling and make a persuasive case that unregulated economic growth will deliver those benefits while avoiding those unacceptable costs and then you will be debating rather then sniping.
3
Yeah, that bad socialist stuff. As opposed to feudalistic corporatism. The first helps the populace. The second helps the 01% by enabling slave wages. Shackles are in the eyes of the beholder.
2
On worker protection
In East Germany, unemployment was zero, everyone having a job. Work was relaxing, about 4 hours in an 8 hour day, balance spend on chit chat, lunch and tea breaks because no one could not get fired. Every worker was entitled to and took vacations in one of those State run resorts. And your children could attend the same Universities as the children of the elite for free.
Alas, standard of living, as measured by the GDP, was abysmally low.
As in all things in life, there is a trade off, and where it should be, is a point on which people can differ.
In East Germany, unemployment was zero, everyone having a job. Work was relaxing, about 4 hours in an 8 hour day, balance spend on chit chat, lunch and tea breaks because no one could not get fired. Every worker was entitled to and took vacations in one of those State run resorts. And your children could attend the same Universities as the children of the elite for free.
Alas, standard of living, as measured by the GDP, was abysmally low.
As in all things in life, there is a trade off, and where it should be, is a point on which people can differ.
9
Classic over the top example - worker protection=socialism, communism, lack of freedom, poverty.
I notice you didn't mention lack of regulation in China with their strong gdp growth until recently, miserable working conditions and welfare except for the elite, similar to this country prior to the 1930s or the industrial revolution of Dickensian England, but that would make the opposite point regarding tradeoffs.
I notice you didn't mention lack of regulation in China with their strong gdp growth until recently, miserable working conditions and welfare except for the elite, similar to this country prior to the 1930s or the industrial revolution of Dickensian England, but that would make the opposite point regarding tradeoffs.
1
Not every worker found a bed in those resorts: you had to be a party member or a member of an affiliate organization like the state controlled single union. And your children could certainly NOT attend university if you were not a party member or at least from a "proletarian" background.
and modern Germany preferred to overlook Russia's Anschluss of Crimea in order not to disturb the economy or interrupt the flow of heating oil for the winter. The trade off seems always to favor capital.
European economies are like cars,
that need to be repaired and refueled.
Merkel stands for: cars need no fuel.
But it would be right to say - no fuel until the car is repaired.
that need to be repaired and refueled.
Merkel stands for: cars need no fuel.
But it would be right to say - no fuel until the car is repaired.
7
I don't get it. Too German to me.
Now, THAT'S an insight impressive in a European.
1
Not quite. Merkel stands for: southern European cars should only get a very limited amount of fuel until the drivers (aka ruling politicians) have demonstrated that they will not drive off the cliff again, at least not until they have actually paid for the car they are driving. Some leaders in other countries seem to take the view that the Germans should shut up, pay for the cars and the fuel of everybody else and then just bugger off.
GDP is a poor measure of economic well-being since it includes all economic activity, whether useful or not (it's the guns or butter problem). Since European countries spend much less on armaments and health care, shouldn't the graphs be adjusted to reflect the nonproductive U.S. economic activity in those areas?
And why isn't the UK in these charts?
And why isn't the UK in these charts?
55
and why isn't the statistic GDP/capita? Only very large firms live in a world driven by aggregate growth. The rest of us, live in a world where growth must be divided among the people.
2
Europe gets a free ride on defense by sheltering under the US military umbrella. Their economies would look very different if they had to pay their own defense costs.
There should be only one indicator of economic well-being, and that is the level of employment, of full employment. People who work produce goods and services; they eat, drink, wear clothes, live in houses, drive cars and buses; they provide for their old age, for their parents and children, pay taxes, have a sense of well-being, of living a worthwhile life. Take away the job, everything breaks down: no new shoes for the kids at school time, no trips to Disneyland or to the movies. Get people working and 99% of all the ills of society are history.
The GDP is a lousy indicator. Economists should dump it.
Michael S. Cullen, Berlin, Germany
The GDP is a lousy indicator. Economists should dump it.
Michael S. Cullen, Berlin, Germany
93
The fundamental mistake of the western capitalism is that we have to work longer and harder to create more to make more to spend more...
An alternative concept is that there is a threshold. If we accumulate more goods that we truly need, then we only work hard for the sake of working hard...
An alternative concept is that there is a threshold. If we accumulate more goods that we truly need, then we only work hard for the sake of working hard...
19
And the process of working longer and harder to create more to make more to spend more sooner or later hits a wall.
6
As a small business owner--with 20 employees, I cheer articles like this.
Nothing helps to illuminate the sheer ignorance and arrogance of Liberalism than examining its misconceptions about business. Since Liberals typically disdain business ownership (believing it is too hard--or is beneath them), they tend not to understand how business operates---or worse, what factors contribute to success or failure.
Examples are everywhere--from Elizabeth Warren's, Hillary's and Obama's shrill cries of "you didn't build that", to Holland's claim that 75% tax rates are actually good for the economy.
Liberals cannot see that behind ALL businesses are humans, who respond in very human ways to the incentives and disincentives of the marketplace. It seems an alien concept--that if the business climate is too onerous, by over-regualtion or over-taxation, business owners will either scale back, not grow, or close down.
The Liberal worldview seems fogged over with the idea that ALL BUSINESS is BIG BUSINESS--and the hatred is palpable. Liberal focus is 100% on large corporations in general, and Wall Street banks in particular. The fog prevents them from seeing that most businesses are small businesses--and when making policies to punish large corporations--smaller ones are damaged in the process.
I have always felt it would be divine justice--to require every Liberal to own a business--for one year. Only then can they be made to understand the damage their policies cause.
Nothing helps to illuminate the sheer ignorance and arrogance of Liberalism than examining its misconceptions about business. Since Liberals typically disdain business ownership (believing it is too hard--or is beneath them), they tend not to understand how business operates---or worse, what factors contribute to success or failure.
Examples are everywhere--from Elizabeth Warren's, Hillary's and Obama's shrill cries of "you didn't build that", to Holland's claim that 75% tax rates are actually good for the economy.
Liberals cannot see that behind ALL businesses are humans, who respond in very human ways to the incentives and disincentives of the marketplace. It seems an alien concept--that if the business climate is too onerous, by over-regualtion or over-taxation, business owners will either scale back, not grow, or close down.
The Liberal worldview seems fogged over with the idea that ALL BUSINESS is BIG BUSINESS--and the hatred is palpable. Liberal focus is 100% on large corporations in general, and Wall Street banks in particular. The fog prevents them from seeing that most businesses are small businesses--and when making policies to punish large corporations--smaller ones are damaged in the process.
I have always felt it would be divine justice--to require every Liberal to own a business--for one year. Only then can they be made to understand the damage their policies cause.
26
Remove the powerful privilege of limited liability bestowed by the public through its government on corporations large and small and let's see if you would want to even be in business.
6
Liberal progressives seem to think that the primary function of business is to provide jobs.
The only problem with your screed, Jesse, is that Mr. Rattner is not talking about 'Liberalism,' which, according to you, is an economic philosophy. Maybe if you actually met some 'Liberals' - in a trip to Holland, perhaps? - you could clear up your own fogged thinking.
In the meantime, I hope your bile stops choking you.
In the meantime, I hope your bile stops choking you.
4
"Among major countries, France and Italy have these problems most acutely, with wages continuing to rise even as the efficiency of workers has stagnated."
Please ! This statement and graphic plainly suggest that "competitiveness" is the ratio of productivity growth over wage growth. By definition, reducing wages to zero (slavery) would give us infinite competitiveness.
France has GDP growth.... it mostly goes to workers. The USA has had slightly more GDP growth over the same period but it all goes to corporation and stock owners. This article makes me want to move to France.
Please ! This statement and graphic plainly suggest that "competitiveness" is the ratio of productivity growth over wage growth. By definition, reducing wages to zero (slavery) would give us infinite competitiveness.
France has GDP growth.... it mostly goes to workers. The USA has had slightly more GDP growth over the same period but it all goes to corporation and stock owners. This article makes me want to move to France.
180
Get thee to France. Hopefully they will have a translator or "navigator" who can help you file for unemployment.
4
Actually, I have a relative by marriage who did just that. Her life is an economic paradise compared to her similarly educated sister who stayed here. Although the US sister lives in NYC and has had a successful career in corporate america, etc. - the direct and indirect social benefits here sister in France enjoys more then erase any income advantage American life brings. The US sister finds herself having to pay out of pocket for services that the French sister pays (a lot less) for with her taxes because of economies of scale.
Furthermore, there is a tortoise and hare aspect to it all. The benefits gained in the short term are often lost over time in the US if the worker experiences unemployment, ill health, or other reversals - all of which the French arrangement hedges against much more effectively.
Furthermore, there is a tortoise and hare aspect to it all. The benefits gained in the short term are often lost over time in the US if the worker experiences unemployment, ill health, or other reversals - all of which the French arrangement hedges against much more effectively.
4
A Greek newspaper had a story about the impediments faced by an entrepreneur who wanted to start an internet business selling olive oil. Numerous bureaucratic approvals were mandated, and he was even required to provide stool samples from each of the shareholders!
Of course the point of all of this was to provide an opportunity to solicit bribes to facilitate approvals. The side effect was to make it hard to start a business. If you make it hard to start a business it's no wonder there aren't any jobs.
Greece may be the most egregious example, but much of Europe does everything they can to discourage businesses from hiring. It's not phrased as such, but that's the practical effect. As Mr. Rattner notes, without structural reform, the debate between stimulus and austerity is just meaningless hot air.
Of course the point of all of this was to provide an opportunity to solicit bribes to facilitate approvals. The side effect was to make it hard to start a business. If you make it hard to start a business it's no wonder there aren't any jobs.
Greece may be the most egregious example, but much of Europe does everything they can to discourage businesses from hiring. It's not phrased as such, but that's the practical effect. As Mr. Rattner notes, without structural reform, the debate between stimulus and austerity is just meaningless hot air.
8
I have often heard that bribes are a necessary part of getting along in the Greek economy. But here in America, we have moved beyond that. We are much more sophisticated and egalitarian. We simply use state, federal and local governments to do our dirty work--to extract the payola.
In our system, the "bribe money" is more equally shared--as it ends up in government coffers--as opposed to the being handed over to the electrical inspector. Although, in thinking about it...perhaps our system is a bit wasteful. The Greek electrical inspector is more likely to be prudent in spending his payola than our government would be.
In our system, the "bribe money" is more equally shared--as it ends up in government coffers--as opposed to the being handed over to the electrical inspector. Although, in thinking about it...perhaps our system is a bit wasteful. The Greek electrical inspector is more likely to be prudent in spending his payola than our government would be.
1
"I have often heard that bribes are a necessary part of getting along in the Greek economy. But here in America, we have moved beyond that."
We do exactly the same, but give it at a higher level, and call it campaign contributions guided by lobbyists.
We do exactly the same, but give it at a higher level, and call it campaign contributions guided by lobbyists.
2
Germany is among the toughest to start a business, yet they're doing really well. Better than us in fact. But don't let facts stand in the way of your preconceived narrative.
2
Thanks for the information. We often seem tied up in a debate about what taxation and spending policies the government should have. We miss the point that making it easy to start new businesses is important and red tape can be a problem. We live in a very competitive world and we would like shelter ourselves from this, but it is often not possible to do this. The NYT and the WSJ have both run articles on the difficulty of starting and expanding a business in some European countries. As an aside, U.S. start ups have also been falling.
.
.
4
If we let any business create a monopoly or dominating market share, the customers will pay for a product more than they should, thus leading them into a personal debt, bankruptcies and endangering the banks that are “too big to fail”.
That is a logical nonsense. There are only the financial institutions that are too big to exist because they control too much market by hoarding too much capital...
If we let the financial institutions grow too big, we become their hostages.
Under those conditions they are allowed to take the business risks because that’s their right.
If they win, they are entitled to rip off the fat profits. If they fail, there are always the taxpayers to cover the losses...
Obviously, right now the people serve the businesses. It used to be that the businesses served the people...
In real democracy, the governments are supposed to serve the people, not the businesses...
If the businesses control everything - the politicians, free press and media outlets, do we have the right to say that we live in democracy?
If we cannot implement the policies that are in our best interest because those would hurt the fat corporate profits, if we take a hit to protect the global corporations, do we live in democracy at all?
That is a logical nonsense. There are only the financial institutions that are too big to exist because they control too much market by hoarding too much capital...
If we let the financial institutions grow too big, we become their hostages.
Under those conditions they are allowed to take the business risks because that’s their right.
If they win, they are entitled to rip off the fat profits. If they fail, there are always the taxpayers to cover the losses...
Obviously, right now the people serve the businesses. It used to be that the businesses served the people...
In real democracy, the governments are supposed to serve the people, not the businesses...
If the businesses control everything - the politicians, free press and media outlets, do we have the right to say that we live in democracy?
If we cannot implement the policies that are in our best interest because those would hurt the fat corporate profits, if we take a hit to protect the global corporations, do we live in democracy at all?
13
"But the focus on macroeconomic policy underappreciates the critical importance of smaller structural problems that collectively amount to a bigger challenge for Europe."
Maybe so, but nothing, I repeat, nothing Mr. Ratner says supports this notion. He points out that the cost of doing business has risen in Europe, but since his first set of graphs omits the US, it is far from clear that the fact US is doing better, as exhibited by the second graph, is due in any way to the factors he points to. (It is also interesting that he omits the Scandinavian countries from his graphs.)
In fact, since we had a stimulus and we had the various QE's, one could just as well conclude that macroeconomic policy is the reason our GDP is growing faster. Also, a simple analysis shows the opposite of what he claims. Europe's problem is similar to that of the US. People who spend money just do not have enough to buy stuff. In the parts of Europe that are suffering there is too much unemployment. Buying bonds will not help. The governments of Europe need to get more money to those who need it, and the way to to that is through fiscal policy--spending more.
As he points out there is no problem with interest rates and everyone knows that deflation, not inflation is Europe's worry, so the ECB could print more euros and somehow get them spent to provide jobs.
A clear explanation of this is provided at https://www.youtube.com/watch?v=Yd6rGbO-ruU&feature=youtu.be&t=1...
Maybe so, but nothing, I repeat, nothing Mr. Ratner says supports this notion. He points out that the cost of doing business has risen in Europe, but since his first set of graphs omits the US, it is far from clear that the fact US is doing better, as exhibited by the second graph, is due in any way to the factors he points to. (It is also interesting that he omits the Scandinavian countries from his graphs.)
In fact, since we had a stimulus and we had the various QE's, one could just as well conclude that macroeconomic policy is the reason our GDP is growing faster. Also, a simple analysis shows the opposite of what he claims. Europe's problem is similar to that of the US. People who spend money just do not have enough to buy stuff. In the parts of Europe that are suffering there is too much unemployment. Buying bonds will not help. The governments of Europe need to get more money to those who need it, and the way to to that is through fiscal policy--spending more.
As he points out there is no problem with interest rates and everyone knows that deflation, not inflation is Europe's worry, so the ECB could print more euros and somehow get them spent to provide jobs.
A clear explanation of this is provided at https://www.youtube.com/watch?v=Yd6rGbO-ruU&feature=youtu.be&t=1...
24
Well, Len, if your objective is to spread the totality of earnings across an entire population through taxation and subsidies, it shouldn't surprise anyone that you attenuate the buying power of those earnings to the point where "people who spend money just don't have enough to buy stuff". It's the natural consequence of leveling a society that you lack concentrated means to spark demand.
1
Richard, please point out where I said I wanted "to spread the totality of earnings across an entire population through taxation and subsidies". I think even you will admit that at some point it is bad for the economy for the Rich to have most of the the money. It is a balance.
History has shown that today's balance (Gini = 0.50) which is similar to the percent the Rich had in the 1920's has been bad for the economy while the balance in the Great Prosperity, 1946 - 1973, (Gini = 0.25) was good.
After you explain how one gets "concentrated means to spark demand.", you might explain how to get blood from a stone. The same ideas should work.
History has shown that today's balance (Gini = 0.50) which is similar to the percent the Rich had in the 1920's has been bad for the economy while the balance in the Great Prosperity, 1946 - 1973, (Gini = 0.25) was good.
After you explain how one gets "concentrated means to spark demand.", you might explain how to get blood from a stone. The same ideas should work.
You think that your job can not be taken by A.I, it means you never invest to investigate this area.
A.I can be even take over some parts of Medical Doctors job entirely.
The issue is we are not living in 1970's or 80's , to be at least pretend , You presume that you can be retired by the time AI take over.
We are at the brink of AI, its complimentary technologies are almost completely developed.
Once US Military needed Fighter pilots to fight, and infantry to put boots on the ground. We do not need anymore.
Fighter pilot is a job , took its place in museum already.
Retirement, for who, how, on the basis of what.
Time is maturated for Machine vs. Human. Brace yourself for impact.
A.I can be even take over some parts of Medical Doctors job entirely.
The issue is we are not living in 1970's or 80's , to be at least pretend , You presume that you can be retired by the time AI take over.
We are at the brink of AI, its complimentary technologies are almost completely developed.
Once US Military needed Fighter pilots to fight, and infantry to put boots on the ground. We do not need anymore.
Fighter pilot is a job , took its place in museum already.
Retirement, for who, how, on the basis of what.
Time is maturated for Machine vs. Human. Brace yourself for impact.
3
Hallelujah! The rich are getting richer in the great 'ol USofA! Are we a great country or what?
25
There is only a debate over the relative merits of austerity vs. QE because QE's effects were felt so sluggishly in the real economy. Many are beginning to point out that QE has a real transmission problem since so much of its impact is absorbed in capital gains and leaks out only slowly through wealth and exchange rate effects. It also exacerbates inequality and undermines the capacity of capital markets to separate good from bad investments.
Will any of your proposed structural adjustments deal with those problems?
Will any of your proposed structural adjustments deal with those problems?
4
As we all can see the QE mainly went to the top, inflating asset prices and real estate (again) while no money was spent on fixing our collapsing infrastructure and education system.
With the higher dollar we will see the US numbers sliding back again towards recession despite years of QE... and what will we have to show for ourselves then other than having ascerbated inequality and therby undermined our democracy ?
With the higher dollar we will see the US numbers sliding back again towards recession despite years of QE... and what will we have to show for ourselves then other than having ascerbated inequality and therby undermined our democracy ?
Where is Saudi Arabia on your charts? I lived there for a few years and let me tell you if you want to see what a world without labor laws is like, where cheap labor is imported from Pakistan, Sudan, and other largely destitute places, where the Saudi masters hold their passports, can fire and deport them at will, where there are no worker rights to speak of, where the low skilled are virtual slaves you'll see what a country dominated by the 'job creators' looks like.
153
There is no anti-business measure in the world. There are only the pro-people measures.
See, the businesses are created to serve the people, not otherwise.
Whatever is good for the businesses is bad for the people. If you make the people work harder and longer above a certain threshold, the extra fat corporate profits come at expense of permanent human stress, exhaustion and irritation. Translate that into the increased cost of the medical care and it’s easy to figure out that such a kind of increased productivity comes at the social loss. The increased corporate profits are only a tiny fraction of the cost to the human health.
The pro-business measures always lead to a social decline. The pro-business measures lead to the export of the jobs overseas and massive unemployment, wide-ranging bankruptcies because the people cannot pay off their accumulated debt, a spike in divorces because the marriages crumble under a burden of chronic debt and ever-longer working weeks, the needless foreign wars to keep the industrial military complex profitable, the skyrocketing health care cost because nobody of us is in position to fairly negotiate when our health and life are in danger, the brainwashing commercials to create the artificial needs in our human mind, the corruption of our elected representatives and chronic budget and trade deficits.
Again, there is no anti-business measure in the world. There are only the pro-people measures.
See, the businesses are created to serve the people, not otherwise.
Whatever is good for the businesses is bad for the people. If you make the people work harder and longer above a certain threshold, the extra fat corporate profits come at expense of permanent human stress, exhaustion and irritation. Translate that into the increased cost of the medical care and it’s easy to figure out that such a kind of increased productivity comes at the social loss. The increased corporate profits are only a tiny fraction of the cost to the human health.
The pro-business measures always lead to a social decline. The pro-business measures lead to the export of the jobs overseas and massive unemployment, wide-ranging bankruptcies because the people cannot pay off their accumulated debt, a spike in divorces because the marriages crumble under a burden of chronic debt and ever-longer working weeks, the needless foreign wars to keep the industrial military complex profitable, the skyrocketing health care cost because nobody of us is in position to fairly negotiate when our health and life are in danger, the brainwashing commercials to create the artificial needs in our human mind, the corruption of our elected representatives and chronic budget and trade deficits.
Again, there is no anti-business measure in the world. There are only the pro-people measures.
21
To test your theory, move to North Korea--or Cuba. Their policies are certainly "pro-people", right? In fact, in these countries, all business is owned by the government--to make sure everything is properly shared.
And the net result of this ridiculous philosophy is complete and total income equality. Yes, everyone in Cuba makes the same $23.00 a month. Is there where we bring in the discussion of their free health care?
And the net result of this ridiculous philosophy is complete and total income equality. Yes, everyone in Cuba makes the same $23.00 a month. Is there where we bring in the discussion of their free health care?
Jessy,
The policies in North Korea and Cuba are not pro-people but pro-business.
It means your example supports my theory. As you should know the governments in both countries are run as family business, like it used to be (or still is) in Saudi Arabia, Qatar, Syria; Libya or Iraq. The only difference is some of them had the oil and the others not...
Any country in which the governmental and executive power goes exclusively to the family members is a run as a family business...
Any society that fails to promote the most knowledgeable and the most skilled individuals into the leadership positions is not pro-people society but at level of partisan, ethnic, tribal or family clan.
Pro-people policies are the policies in the best interest of all the people, not of any tiny segment within it...
The policies in North Korea and Cuba are not pro-people but pro-business.
It means your example supports my theory. As you should know the governments in both countries are run as family business, like it used to be (or still is) in Saudi Arabia, Qatar, Syria; Libya or Iraq. The only difference is some of them had the oil and the others not...
Any country in which the governmental and executive power goes exclusively to the family members is a run as a family business...
Any society that fails to promote the most knowledgeable and the most skilled individuals into the leadership positions is not pro-people society but at level of partisan, ethnic, tribal or family clan.
Pro-people policies are the policies in the best interest of all the people, not of any tiny segment within it...
Jessy,
There is a huge difference between democratically implemented policies and pro-people policies.
Democratically implemented policies is what we have here in the US. The people vote and send either the Democrats or the Republicans to the White House and the Congress.
However, both parties only implement the policies that in the best interest of a tiny segment of people.
That’s why the approval ratings of Congress are in a single-digit range.
The approval ratings of the presidents usually end up (by the end of their term) in 30-something percent range only because the Americans think it’s their patriotic duty to support their leader, not because they are happy with his or her leadership.
Blaming solely the Congress or the White House for the policies that they created together is not fair at all...
There is a huge difference between democratically implemented policies and pro-people policies.
Democratically implemented policies is what we have here in the US. The people vote and send either the Democrats or the Republicans to the White House and the Congress.
However, both parties only implement the policies that in the best interest of a tiny segment of people.
That’s why the approval ratings of Congress are in a single-digit range.
The approval ratings of the presidents usually end up (by the end of their term) in 30-something percent range only because the Americans think it’s their patriotic duty to support their leader, not because they are happy with his or her leadership.
Blaming solely the Congress or the White House for the policies that they created together is not fair at all...
Rather short-sighted, to say the least. Put this piece together with articles about global warming, pollution (such as in China, but also all over the US), and the need for funds for early ( and late) child education and making colleges affordable, and you get one big contradiction. Solve this, please, Mr. Rattner, in a short op-ed piece.
13
The ECB's decision is hardly a plunge, but pejorative language like this discredits the article. Europe has its problems, but it also has good points. Essentially, Ratner wants to turn Europe into another crippled America.
14
"No bucks, no Bucks Rogers." Most countries have a revenue problem. The biggest taxpayers should be the biggest businesses but thanks to the archaic separate accounting system which facilitates transfer pricing and profit shifting to subsidiaries in tax havens like Luxembourg, Ireland, & Channel Islands, governments are starving for revenues. No amount of fiddling with the separate accounting system will stop this massive profit shifting. It must be and has to be scrapped and replaced with the only viable alternative: unitary worldwide combined reporting. Don't let perfect be the enemy of good because the worldwide combined reporting is so much better than separate accounting. As far back as 1983, the US Supreme Court approved unitary worldwide combined reporting at the state level (Container decision) and approved it again in 1994 by larger majorities (Barclays Bank by a vote of 7-2 and Colgate-Palmolive by a vote of 9-0!).
The question that needs to asked and answered by the NYTimes is why this method is not used by most states today instead of water's edge combined reporting which excludes the profits of foreign subsidiaries ("overseas business organizations") from the tax base. As a result, the water's edge method is really watered-down or skim milk combined reporting. The state of NY recently adopted this method and NYC's Mayor De Blasio and Finance Commissioner Jacques Jiha are looking at it. Yes, billions may be in Delaware but trillions are in Luxembourg!
The question that needs to asked and answered by the NYTimes is why this method is not used by most states today instead of water's edge combined reporting which excludes the profits of foreign subsidiaries ("overseas business organizations") from the tax base. As a result, the water's edge method is really watered-down or skim milk combined reporting. The state of NY recently adopted this method and NYC's Mayor De Blasio and Finance Commissioner Jacques Jiha are looking at it. Yes, billions may be in Delaware but trillions are in Luxembourg!
6
Rattner attempts to make the case that labor and productivity reform are more important than the macro issues of monetary policy and stimulus spending. But he does not accomplish that. The primary issue around the globe is low demand and the resulting liquidity trap and distortions of the zero lower bound on the behavior of interest rates.
His case is that the existence and magnitude of the labor and productivity issues makes them more important. I have never heard anyone focused on macro state that those issues are not real or not significant. In fact they would go a step further and state that inter-country differences in labor cost and the inability for a country's currency to adapt to labor differences is important as well. What they say, and what has convinced me, is that the demand issue is larger that the supply-side issues and needs to be solved first.
There are demand-side problems and supply-side problems. The demand-side problems need to be fixed first to spur growth and inflation - thus the focus on macro. In the meantime, it is fine to work on supply-side issues so long as they do not push toward recession or deflation, but they are unlikely to solve the demand-side problem. Demand-side help needs to come first, and that means stimulus and loose money. Supply-side issues notwithstanding.
His case is that the existence and magnitude of the labor and productivity issues makes them more important. I have never heard anyone focused on macro state that those issues are not real or not significant. In fact they would go a step further and state that inter-country differences in labor cost and the inability for a country's currency to adapt to labor differences is important as well. What they say, and what has convinced me, is that the demand issue is larger that the supply-side issues and needs to be solved first.
There are demand-side problems and supply-side problems. The demand-side problems need to be fixed first to spur growth and inflation - thus the focus on macro. In the meantime, it is fine to work on supply-side issues so long as they do not push toward recession or deflation, but they are unlikely to solve the demand-side problem. Demand-side help needs to come first, and that means stimulus and loose money. Supply-side issues notwithstanding.
7
When "low demand" is consumer demand, one has to look primarily at tax policies of each nation. Consumer demand is driven, especially in consumerist America, by how much money consumers have in their pocket.
When governments confiscate large portions of a consumer's disposable income, what do you think happens to demand? Europe has focused so much on "taking care of everyone", they have essentially created a "pocket change society".
And it's not just paychecks that take a hit. Look at fuel prices. If you think they charge $8.00 a gallon for gas in France, in an attempt to prevent global warming, you'd be wrong. They have taxed the hell out of fuel for decades--so they can get their hands on money for more social programs. When gas prices decline here, consumers have more disposable income--and we spend it. In Europe, there's not much left in the till after the government take.
Demand starts with the consumer. To jumpstart demand, we need to curb the voracious appetite of government for our earnings--and let people have more to spend. Wait...did I just say "make government smaller". Yeah...I did. Don't worry....people are smart enough to take care of themselves--if given the chance.
When governments confiscate large portions of a consumer's disposable income, what do you think happens to demand? Europe has focused so much on "taking care of everyone", they have essentially created a "pocket change society".
And it's not just paychecks that take a hit. Look at fuel prices. If you think they charge $8.00 a gallon for gas in France, in an attempt to prevent global warming, you'd be wrong. They have taxed the hell out of fuel for decades--so they can get their hands on money for more social programs. When gas prices decline here, consumers have more disposable income--and we spend it. In Europe, there's not much left in the till after the government take.
Demand starts with the consumer. To jumpstart demand, we need to curb the voracious appetite of government for our earnings--and let people have more to spend. Wait...did I just say "make government smaller". Yeah...I did. Don't worry....people are smart enough to take care of themselves--if given the chance.
1
I guess Europe can go back to what made them great between 1490-1950; colonization (hopefully this time without intermittent wars against one another, and one genocide after another). How else could it support, with any real success, more less the entire population that feels entitled to a good life without doing much (of course regional variations from Germany to Greece exist).
Greece's recent election suggests that someone promising more government help with money that is not there can win an election. I wonder whether someone promising colonization of resource-rich countries, so that the entire population can live on estates on the backs of native workers would get a landslide of approval.
Cheers Europe, the Disneyland across the Atlantic. I still love your quaint, cuteness and your cheeses.
Kalidan
Greece's recent election suggests that someone promising more government help with money that is not there can win an election. I wonder whether someone promising colonization of resource-rich countries, so that the entire population can live on estates on the backs of native workers would get a landslide of approval.
Cheers Europe, the Disneyland across the Atlantic. I still love your quaint, cuteness and your cheeses.
Kalidan
3
Europe needs a sharp dose of our most effective business policies: a focus on efficiency, profits, and sound policies and the US needs to adopt some worker protections.
Perhaps then we can achieve the kind of Nirvana state that utopians would applaud: a kind, gentle set of policies to protect against the side effects of ruthless capitalism.
Perhaps then we can achieve the kind of Nirvana state that utopians would applaud: a kind, gentle set of policies to protect against the side effects of ruthless capitalism.
2
>
Ya they need to kiss the butts of their industrialists and rich like we do in this country. Destroy the social safe net. Implement the ideology, like we have, that the poor have too much and the rich have too little. That is the answer.
Ya they need to kiss the butts of their industrialists and rich like we do in this country. Destroy the social safe net. Implement the ideology, like we have, that the poor have too much and the rich have too little. That is the answer.
68
The Funny thing is what happed to Italy. Italy used to be a country not unlike Germany with City States (Milan, Florence, Venice, Roma) un centralized down top economy dedicated to business controlled by rich merchants. France has always been governed from the center, from Paris, and the culture of those at the center has always been foreign to economy. France has always been a country governed by intellectuals and liberals after the revolution compared to Italy and the only good thing that came out of it is their deep skepticism about all totalitarisms including fascism. Fascism could not have taken place in France.
3
A new requirement that all part-time jobs be at least 24 hours per week in France? Just when you thought you heard it all (like a 75% marginal tax rate), the French come up with this incredible loser.
8
German industry is at least partially protected by government policy from the solar/wind mandate residential customers are faced with. Average price per kWh to German homes is 35 cents--about 3 times as high as average US power prices. German consumers would have more Euros to spend if the sun worshippers would back off.
3
Definitely a good time to listen to a Wall Street financier. The Dow is above 17,000 and 2008 is barely within living memory.
4
Just want to interject with one point. Europe's unemployment rate of 11.5% vs 6% in the US is not a fair comparison. In the US, after a period of time looking for work people "drop out" of the workforce, and are no longer counted in the official stats. While in Europe, practically everyone is entitled to generous benefits, so no-one in their right mind drops out of the system. Other measures of unemployment, which more closely mirror the situation in Europe, give a US rate of 11-12%, identical to Europe. Having said all this, im not denying there's a crisis in Mediterranean Europe.
36
They are always beating their chest in the US. The greatest country in the world. The American dream (a dream country for who? Not Europeans today) The greatest universities if you can afford them and speak your mind -you cannot, they'll toss you. In many ways it is a third world country with a large segment of the population uneducated and.. religious (it goes together).
5
Europe's published rates have the same tricks and biases and are closer to 20%.
1
"Europe's unemployment rate of 11.5% vs 6% in the US is not a fair comparison. In the US, after a period of time looking for work people "drop out" of the workforce, and are no longer counted in the official stats. While in Europe, practically everyone is entitled to generous benefits, so no-one in their right mind drops out of the system."
Yes, and what is offensive about this is that Mr. Rattner surely knows it. There is an extensive economic literature on this topic of differing methodologies (as well as how the US has massaged its methodology through the years to reduce the number for political reasons) and a man with his experience could hardly not know that.
Back in the 1990s and 2000s, when economists used apple-to-apple models to correct for this problem, they found that the US performed better on employment, but only marginally so - no the big disparities typically appearing in headlines.
It would be fascinating to see where the difference is now in the aftermath of the Great Recession, especially as the internal rates in the EU have diverged so dramatically between place like Spain and Greece (which have numbers rivaling the US's in the early 1930s) and places like Norway (which last I looked had a labor shortage.)
Yes, and what is offensive about this is that Mr. Rattner surely knows it. There is an extensive economic literature on this topic of differing methodologies (as well as how the US has massaged its methodology through the years to reduce the number for political reasons) and a man with his experience could hardly not know that.
Back in the 1990s and 2000s, when economists used apple-to-apple models to correct for this problem, they found that the US performed better on employment, but only marginally so - no the big disparities typically appearing in headlines.
It would be fascinating to see where the difference is now in the aftermath of the Great Recession, especially as the internal rates in the EU have diverged so dramatically between place like Spain and Greece (which have numbers rivaling the US's in the early 1930s) and places like Norway (which last I looked had a labor shortage.)
1
And where has this worked? Since 1980 in Britain and the US regulations have been slashed, labor markets liberalized, monopolies and oligopolies allowed to dominate sectors of the economy and the tax burden shifted from the investment class to white and blue collar workers. Where is the explosion of growth that neo-liberals have been promising would follow these measures? (You're starting to sound like die-hard Marxists: It didn't work because it wasn't completely implemented!)
All that has happened is that manufacturing jobs has been exported to China where workers are mercilessly exploited, the environment is being destroyed, corruption is rife and the government shoots anyone that complains in the head.
If you want to compete with China you're going to have to become China. I'm starting to think that is precisely want right winger and the investment class want.
All that has happened is that manufacturing jobs has been exported to China where workers are mercilessly exploited, the environment is being destroyed, corruption is rife and the government shoots anyone that complains in the head.
If you want to compete with China you're going to have to become China. I'm starting to think that is precisely want right winger and the investment class want.
122
Leave it to a reformed financial hustler to paint a picture cherry picking the data to "prove" his argument. What I find interesting, US corps are warehousing themselves in Europe and elsewhere because of lower tax rates, yet City Slicker Steve claims rates are higher and regulation worse. And if US crops are so interested in profit maximization shouldn't they be borrowing money like crazy in France, get a sharpie like Rattner to lay of the currency risk, then invest where the cost of capital is so low and labor is slack? And lastly, what is wrong with looking out for labor? After all, who really does the work, a mechanic/mill worker or a pencil pushing, calculator tapping, smooth talker in the mold of Steve Rattner?
46
Someday, I pray, Mr. Ratner will propose a path to prosperity that did not depend upon the impoverishment of the working class. This thesis - that all a laid off manufacturing worker at an Ohio machine tool company (or a Carolina textile mill, or a Belgian auto plant) need do is retrain themselves as an computer engineer and six figure salaries await them once they relocate to Silicon Valley - is getting really tired. The fantasy of it is insulting. The callous disregard of the suffering visited upon entire towns and regions as the hopes of a generation is lost is simply stunning.
231
So all of these structural problems must have occurred after 2007 or so, because before that point they weren't causing the massive unemployment that we see now across much of Europe.
Amazing how deep, structural issues like that can appear in just a couple of years.
Yes, there are all sorts of structural complications facing Europe just like anywhere else, but the idea that the recession/depression was caused by these, or as this writer asserts, won't be resolvable without solving these, is contrary to the evidence, as even a glance at Europe in 2006 will show you.
Amazing how deep, structural issues like that can appear in just a couple of years.
Yes, there are all sorts of structural complications facing Europe just like anywhere else, but the idea that the recession/depression was caused by these, or as this writer asserts, won't be resolvable without solving these, is contrary to the evidence, as even a glance at Europe in 2006 will show you.
15
The structural problems in, Greece, Spain etc) were present long before 2007.
The 2002 to 2007 boom (Spain property bubble, Greek Olympics) just masked it.
The financial crisis exposed what was present already.
The 2002 to 2007 boom (Spain property bubble, Greek Olympics) just masked it.
The financial crisis exposed what was present already.
1
Rattner mentioned France and Italy, specifically, and what he has to say doesn't apply to them. He's claiming that their structural problems will keep them from getting back to the booming economies they had before 2007--- when as you say, whatever structural problems there are now were there then also.
His piece is incoherent, and since I wrote my comment, others have weight in with about the same sort of reaction:
http://www.cepr.net/index.php/blogs/beat-the-press/arithmetic-is-very-si...
http://krugman.blogs.nytimes.com/2015/01/29/i-do-not-think-that-number-m...
His piece is incoherent, and since I wrote my comment, others have weight in with about the same sort of reaction:
http://www.cepr.net/index.php/blogs/beat-the-press/arithmetic-is-very-si...
http://krugman.blogs.nytimes.com/2015/01/29/i-do-not-think-that-number-m...
1
Mr. Rattner is the expert. He has attained prominence on Wall St. and no doubt has a large income, many investments, and no financial concerns. His analytical view is the natural result of his experience. Good for him. But I'm not comfortable with his views about income and regulated working hours. There is always an adversarial relationship between employers and employees. In the USA, employers currently have the upper hand. Perhaps it's the other way around in Europe, but if the path to business success requires small wages and many hours of unreliable work, so much so that workers can barely survive, then this is clearly the wrong path to success.
40
Mr. Rattner, your charts mean nothing. The US may be shown to "zoom ahead," but what exactly do you mean by the "US?" If you mean the owners of capital, then I guess we are zooming ahead; if you mean the working people, I don't guess we are. What are national economies for? Enriching the former group only?
As far as regulation is concerned, the question of an efficient and effective system without "senseless" regulation is a separate question from whether we should have it. We certainly got a lesson in the effects of deregulation in 2008. Could we see some charts showing how much more the banks were "made whole" while home owners never regained their lost equity? While we're on charts, let's show one with worker productivity in the US going up with worker pay flat-lining. Where are those added profits going?
As for the Germans backing off from nuclear energy: doesn't it strike you as odd that this ultra-efficient nation may have considered factors other than cost in its decision? Like the safety and well-being of its people? Therein lies the difference between Europe and the US.
As far as regulation is concerned, the question of an efficient and effective system without "senseless" regulation is a separate question from whether we should have it. We certainly got a lesson in the effects of deregulation in 2008. Could we see some charts showing how much more the banks were "made whole" while home owners never regained their lost equity? While we're on charts, let's show one with worker productivity in the US going up with worker pay flat-lining. Where are those added profits going?
As for the Germans backing off from nuclear energy: doesn't it strike you as odd that this ultra-efficient nation may have considered factors other than cost in its decision? Like the safety and well-being of its people? Therein lies the difference between Europe and the US.
116
My thoughts exactly. Perhaps the Germans are engaging in , gasp, some long term thinking and strategizing in regards to energy policy. They're investing in alternative and renewable sources that will inevitably pay off in the long term and make Germany more independent, environmentally safer and economically competitive.
1
Your comment about the banks being made whole while homeowners never regained their lost equity makes no sense yet is repeated relentlessly by liberal interest groups. Banks were provided financing by the US government during the crisis at penalty level (high) interest rates. The large banks paid all of those loans back with interest. Every dime. Their stock prices (their equity) was not bailed out and in some cases was crammed down. Homeowners are provided with subsidized (below market) loans from the US government on a continual basis. Most homeowners pay back these loans, some do not. Bank stock prices are below and in some instances significantly below where they were in 2006. Given these circumstances why do so many people continue to claim that banks got "bailed out" so homeowners should get principal reductions on their mortgages funded by US taxpayers?? Banks paid back their loans. If that qualifies as bailout then US homeownerfs continue to obtain an even better bailout as we speak.
The last line of this column should read "That is the only viable path to sustainable growth and, ultimately..." the potential for more jobs or massive unemployment. Nothing is guaranteed.
When talking about theoretical constructs about economic matters, it is important to remember that virtually all arguments are just that, theories. Yes, the overregulation of business, which does occur in Europe, makes it difficult to operate and expand, but not impossible. Eliminating all or most rules can create chaos and an invitation for exploitation and illegality, of which we have seen much in American history. The laws we have now were a direct response to gross mistreatment and exploitation.
Europe is highly regulated and labor is appeased as part of a social contract to stave off communism and maintain the social status quo. Those who held wealth were assured of less pressure from change and entrepreneurial intrusion, while the middle economic classes were, in effect, paid to shut up and accept their heavy package of benefits, including lots of time off (6 to 8 weeks a year), long lunches, shorter work hours, earlier retirement, health care and job retraining.
We have much higher growth rates, no job protections for workers in most cases and, until recently, employers had life and death power over workers when they were fired and lost health insurance.
Debating regulation during a govt. induced recession in Europe misses the larger point, intentionally.
Doug Terry
When talking about theoretical constructs about economic matters, it is important to remember that virtually all arguments are just that, theories. Yes, the overregulation of business, which does occur in Europe, makes it difficult to operate and expand, but not impossible. Eliminating all or most rules can create chaos and an invitation for exploitation and illegality, of which we have seen much in American history. The laws we have now were a direct response to gross mistreatment and exploitation.
Europe is highly regulated and labor is appeased as part of a social contract to stave off communism and maintain the social status quo. Those who held wealth were assured of less pressure from change and entrepreneurial intrusion, while the middle economic classes were, in effect, paid to shut up and accept their heavy package of benefits, including lots of time off (6 to 8 weeks a year), long lunches, shorter work hours, earlier retirement, health care and job retraining.
We have much higher growth rates, no job protections for workers in most cases and, until recently, employers had life and death power over workers when they were fired and lost health insurance.
Debating regulation during a govt. induced recession in Europe misses the larger point, intentionally.
Doug Terry
7
It is fascinating that Mr. Rattner insists on promoting the now discredited economic ideology that insists on Human beings being equivalent to goods and services. The Greek election is the beginning of an alternative approach that values human society over economic society. Europe is not antibusiness. It recognizes the core importance of well behaved equitable tax paying business to Human welfare. Most of Europe just gives higher importance to people and human wellbeing than to a narrow economic ideology.
80
Wow what a lot of words to prove once again that Wall Street titans make terrible economists. Financial capitalism as practiced since the 1980's and advocated by the likes of Mr. Rattner has led to soaring profits but failed to deliver to society as a whole. It has led to stagnating real incomes for the vast majority of people while our public infrastructure crumbles. The idea that we should double down with supply-side "reforms" is a farce. The only response to the bind we are in comes from an idea much older than capitalism - democracy. Let's all cheer on the new government in Greece, and once again let it be a model for the rest of the world.
192
You are kidding, right? Supply side solutions to a problem of slack demand? In a nutshell, you propose that Europe's problems can in part be solved by allowing businesses to more easily fire people? Be-u-tee-ful.
194
Supply side solutions alone won't do the trick. However, public stimulus alone won't either. You should look at some of the protection that employees get e.g. in Italy. If you are an employer, you must think thrice before hiring anyone, because more likely than not, you are going to be obliged to paying her until retirement age. This is one of the reasons that Italy has such a high rate of unemployment among the young. And it is one of the reasons why Fiat has effectively ceased to be an Italian company. Would you invest in Italy?
2
Mr. Rattner, without saying so openly, seems to be suggesting that the U.S. and Europe need to pattern themselves after China. Well it is true that the Chinese are gaining in industrial strength while the rest of us decline, actually running into a labor shortage to serve their burgeoning export business, and they are creating a new billionaire class faster than anyone else.
15
We are not going to become slaves just to make the 1% richer. If anything we should be fighting for a 30 hour work week. Enough is enough.
163
You are located in Greece. Please explain to me how mandating a 30 hour work week (probably coupled with a generous minimum wage) is going to get the Greek economy rolling. If you had 1 $ to invest, would you invest it there under those conditions?
10
Anyone wanting an idea of how Greece's economy has come to the state it's in need only read this comment.
4
Why 30? Why not 10? And free massages, haircuts,mand unicorns?
1
Thank you Mr. Rattner! I hope that Prof. Krugman takes note. As you say, the problems in Europe cannot be reduced to a simplistic macroeconomic dichotomy of public spending vs. austerity. The problem with the "let's increase public spending" argument has always been that it does not take into account the political and cultural realities (and differences) within the EU. Increasing public spending in Greece will probably simply lead back to the "old system", i.e. a bloated and inefficient public sector that serves as a tool for vote buying. Before the Euro, a foundation of French and Italian policy was to hide the effects of an economically unsustainable amount of public spending by devaluing the national currency. That is the antithesis of German fiscal policy. Germany is often made out to be the austerity bogeyman who is ruining Europe by not letting the money flow. The truth is that a large majority of the German electorate does want to see its savings and pensions be devalued by reckless public spending in countries that in the past have not demonstrated that their politicians are sincere in wanting to actually improve competitiveness. There is a lack of trust in the political elite of countries like Greece, and I think that given history, that skepticism is justified.
12
"Thank you Mr. Rattner! I hope that Prof. Krugman takes note."
I kond of hope he does too. Rattner's cherry picking of data and non-sequitur conclusions would get an "F" in any good undergraduate economics class. A Krugman rebuttal has the potential to be an EPIC takedown!
I kond of hope he does too. Rattner's cherry picking of data and non-sequitur conclusions would get an "F" in any good undergraduate economics class. A Krugman rebuttal has the potential to be an EPIC takedown!
4
Anti-Business Stance? Of course, you can not have your countries economic system based on socialism and expect otherwise. The trend is for all these European governments to go deeper and deeper into government handouts, restriction of freedom and not see where it is going, mostly to hell. Socialism means printing money, constantly and in ever growing quantities. There is not way a country can become competitive with capitalistic economies when it is driven by socialism. The US is finding that out. .
5
Perhaps we have the basis of a sound set of policies moving forward. This would be a two path approach that involves increased competitiveness and a simpler, easier, healthier business that is coupled with a more appropriate macro-economic policy that switched from austerity to investment.
I'm always confused why capitalism and free markets is described as something that occurs BETWEEN countries rather than WITHIN countries. Virtually ever government in the world could maintain protectionist policies in regards to their trading partners, and still greatly increase growth and productivity by investing in small business, entrepreneurship, innovation, research, and capitalism for the bottom 99% at home. After all, the most important economy is the domestic economy of any nation, and that is where improvement will have the greatest benefit.
I'm always confused why capitalism and free markets is described as something that occurs BETWEEN countries rather than WITHIN countries. Virtually ever government in the world could maintain protectionist policies in regards to their trading partners, and still greatly increase growth and productivity by investing in small business, entrepreneurship, innovation, research, and capitalism for the bottom 99% at home. After all, the most important economy is the domestic economy of any nation, and that is where improvement will have the greatest benefit.
6
The recipe seems to be the usual conservative, market based solution: easier firings, less tax at the top…and the economy will bloom.
Nevertheless, he is right on the topic of bureaucracy and slow and inefficient judicial system. But fiscal evasion and self-perpetuating political parties that are unresponsive to public needs don't help either.
Nevertheless, he is right on the topic of bureaucracy and slow and inefficient judicial system. But fiscal evasion and self-perpetuating political parties that are unresponsive to public needs don't help either.
43
The Judicial system is quite efficient in France. Fiscal evasion is nothing compared to Italy. You still have a Democratic and a Republican party in the US.
Rattner must explain how this has come about .... Income inequality has soared in the US, but in EU, the gap between haves/have nots has widened only modestly.
In the US we have been creating new have nots. In the EU, even if the gap is large re income, the mass of average earners are more secure with truly universal health insurance, child care subsidies, and low cost college. And wider union membership. And how does their publicly financed elections with no privately paid political ads figure into the equation?
Rattner’s previous op ed had graphs showing the difference public spending makes in the well being of average people in various countries. The US is low ranking in the list.
What is the true effect of rules that strictly regulate hiring/firing and hours of workers? They protect workers from being throw aways on the 1 hand, yet restrict business and thus job creation on the other? Please explain that.
Here workers have been kept part time so businesses don’t have to pay them benefits. Underpaid full timers get state aid, to preserve billions in profits of the Walmarts, etc. Also states can keep Medicaid out of Obamacare. This creates more have nots. Contrast this with EU.
Rattner's chart shows “GDP--the US soars ahead.” But for which groups? It's widely reported the recovery has gone to the 1 %. Are we still being counseled to wait for trickle down---maybe in the next life? While the US boasts?
In the US we have been creating new have nots. In the EU, even if the gap is large re income, the mass of average earners are more secure with truly universal health insurance, child care subsidies, and low cost college. And wider union membership. And how does their publicly financed elections with no privately paid political ads figure into the equation?
Rattner’s previous op ed had graphs showing the difference public spending makes in the well being of average people in various countries. The US is low ranking in the list.
What is the true effect of rules that strictly regulate hiring/firing and hours of workers? They protect workers from being throw aways on the 1 hand, yet restrict business and thus job creation on the other? Please explain that.
Here workers have been kept part time so businesses don’t have to pay them benefits. Underpaid full timers get state aid, to preserve billions in profits of the Walmarts, etc. Also states can keep Medicaid out of Obamacare. This creates more have nots. Contrast this with EU.
Rattner's chart shows “GDP--the US soars ahead.” But for which groups? It's widely reported the recovery has gone to the 1 %. Are we still being counseled to wait for trickle down---maybe in the next life? While the US boasts?
342
When I was a small boy and spending time with my Grandfather and he saw me squirming and holding myself he would ask" do you have to trickle ". Well hand me some toilet paper I think there`s a trickle coming down from the 1%ers.
I have lived in both countries and I must say than inequality is shocking in the US starting with education. A very much hypocritical society that shows you what happen when the rich merchants control all levels of power.
7
You make excellent points. What good is an economic system if it locks out the vast majority from being able to make a living wage? Ultimately that is no good for business either, as there will be no consumers who have money to buy what they make. Economics cannot be all about doing business the way it was done during the Gilded Age. There has to be a balance between the public's interest and business interests-- and yes there is often tension between the two. But that is what government is for, to manage and balance the interests of both business and the worker.
12
Restrictions on hiring and firing?
Instead we ought to be admiring,
There's no call to heed
The huge profit need,
A need that's crying for expiring
Instead we ought to be admiring,
There's no call to heed
The huge profit need,
A need that's crying for expiring
82
You make no sense. Would you prefer European levels of unemployment and all the grief (especially among the youth) that it entails. That is nothing to admire, and in part a result of hiring and firing policies that go back decades and are now widely acknowledged as harmful for the labor market.
7
If the NY Times had not laid off workers, it would have gone bankrupt and be out of business by now......and you'd have to find another place for your limericks!
4
Larry cannot ever have run a business. He is a frustrated poet, and not that successful I would venture. When the incentive is to work less hours ideas and productivity stagnate. France years ago actually went into the parking lots of corporations and logged time-in for workers cars....to make sure no over 36 hour week. I guess quality of life might be wonderful for some playing botchi ball with all the off time but the price is a very screwed up economy. Course the answer is to raise taxes to make up for lost revenue and BTW, Frenchmen who own company's, many I know...left the country and took their businesses with them. Guess the answer then becomes government run companies....like our Post Office.
2