How Dems and Reps Differ: Clive Crook Edition
Bryan Caplan
Clive Crook's cynical view of America's liberal-conservative divide mirrors my own. Quoth Crook:
"Progressives and conservatives alike call the United States a "free-market economy": both sides have an interest in perpetuating this delusion. The idea is ridiculous - as ridiculous as calling Europe's economies "socialist". True, the blend of government and private enterprise is a bit different between the US and the European average, but the models (insofar as it makes sense to talk of a European model) are neighbors not polar opposites.
All this was true, obviously, long before 2009. Obama, I agree, does want to narrow the gap a bit more - but it just was not that wide to begin with. Public spending is lower in the US, but not vastly lower once you remember to add state and local spending to federal outlays; the US healthcare anomaly accounts for a lot of the remaining difference.
In most respects (labor protections are the main exception) the US regulatory state is at least as comprehensive and intrusive as those in Europe. As for the constant tyranny of petty bureaucracy, let me say as somebody who has lived in Britain and now in the US that it seems even worse here. One's interaction with officials of one sort or another is endless. Admittedly, I am an immigrant living in DC, which demands additional oversight. Who knows what I might get up to? Still, these days, I wince every time I hear, "It's a free country." No, it isn't."
Sad but true. I would say, though, that the lower level of U.S. labor regulation is a massive advantage that has kept the average U.S. unemployment rate far below Europe's for decades.
econlog.econlib.org
Unemployment: Do Europhiles Have Anything to Celebrate?
Bryan Caplan
"U.S. Unemployment Rate Now as High as Europe," gloats a new issue brief from the Center for Economic and Policy Research. The subtext: Europe's heavy labor market regulation isn't so bad after all. In fact, since the "case for the superiority of the U.S. model was always exaggerated," maybe the European model is better. Let's take look at the brief's main graph:
Frankly, a Europhile would have to be demented to take comfort in this graph. Can one year of parity wipe out a decade and a half of vastly inferior performance? If you take a look at this graph from the JEP, you'll see that Europe's inferiority began long before Eurostat starting keeping tabs. Europe has done worse than the U.S. for the last 25 years. The U.S. recovered from the monetary and oil shocks of the 70s and 80s, but Europe has never been the same.
Now take another look at the CEPR graph. During the dot-com bust, U.S. unemployment remained below Europe's, but it clearly rose faster. Isn't this further evidence that the mainstream case against European labor market regulation is overstated?
On the contrary, this is precisely what the mainstream case predicts! Europe makes it harder to get rid of workers, so it's only natural that when a big shock hits, U.S. unemployment rises more. However, precisely because it is easier for American wages to adjust and American employers to change their minds, our labor market is also relatively quick to recover.
Unemployment is a terrible thing. It's not just a waste of resources. It also makes people miserable far more than an equivalent income loss. When you read the history of the Great Depression, it's hard not to notice another horrible cost: Unemployment undermines support for a free society by robbing ordinary people of their independence and self-respect. By this standard, the U.S. is temporarily doing poorly. But it won't last. In the U.S., unlike Europe, high unemployment is not a way of life.
econlog.econlib.org
I hope it won't last, but with the increasing drive to tax and regulate, and extend unemployment benefits, etc. it might become a way of life. |
