Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (100195)	6/4/2003 1:21:16 PM
From: Ilaine	Read Replies (1) \| Respond to of 281500

It's apples and oranges. Total tax revenue as a percentage of GDP is the appropriate basis for comparison. oecd.org

To: Hawkmoon who wrote (100195)	6/4/2003 2:28:38 PM
From: Elsewhere	Respond to of 281500

So why has economic growth lagged that of the US for so many years? I wish I had a clear answer on that question. It's a confluence of many factors, here are some: 1) High wages: I always thought them to be a problem. But when I gathered data for this message I discovered that unit labor costs have dropped faster in Europe than in the USA during the past decade, see Department of Labor, Bureau of Labor Statistics, International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, Revised Data for 2001 Table 10: Unit labor costs in manufacturing, U.S. dollar basis, 14 countries or areas, 1950-2001 bls.gov Here an extract of 2001 unit labor costs in manufacturing (1992 = 100): USA 94.1 GB 95.3 France 62.6 Germany 78.7 2) Too beneficial social welfare: a) Duration: in the USA welfare is limited to a couple of years. In Germany there is no such limit. b) Level: welfare competes with low-wage jobs. In Germany welfare is about 320 euro/month plus substitution of flat rent. dradio.de 3) Bureaucracy: about 60% of all tax literature worldwide is published for German tax regulations. - In Europe there are probably more laws and regulations to be observed like environmental issues or protection of employee rights. 4) Lack of entrepreneurial spirit: people in Europe are on average more risk-averse than in the USA. There are less business founders. In Germany an unsuccessful startup was considered a stigma until not long ago; after a business failure it was difficult to obtain a bank credit for a new attempt. Many university graduates don't aspire to join aggressive, young ventures but prefer staid companies or even public service. 5) Lack of innovation: the top universities are much more competitive in the USA than in Europe judging by the number of Nobel Prizes, for instance. The academic leadership is transferred to industrial innovations creating new product areas. 6) Demography. And why is a stronger dollar threatening to thrust Germany into recession? In absolute terms the dollar decline doesn't have a dramatic effect in Europe. The majority of German exports, for instance, target countries in the euro zone. In dollar markets German products frequently don't compete on price. And a lower dollar also means cheaper purchases for imports (oil and other preliminary products). Yet the euro rise might be the proverbial straw breaking the camel's back. Unemployment is expected to hit a post-war record in Germany during the coming winter, about five million people. This isn't far away from Weimar levels any more. Btw, do unemployed workers pay taxes on their benefits as they do here in the US? Unemployment benefit is 67% of the previous net income for workers with children and 60% for childless workers. europa.eu.int Fortunately in Germany at least the awareness of the severity of the structural problems is rising among politicians. On Sunday Schroeder was able to convince his party at a special national conference of agreeing to some initiatives labeled "agenda 2010". Maybe there's a "Nixon in China" way ahead: a social democrat cutting back unaffordable social benefits. Germany's Social Democratic Party Endorses Schröder The New York Times June 2, 2003 nytimes.com Germany Remodels The Christian Science Monitor June 03, 2003 csmonitor.com Schröder wins over party to reform course The Guardian June 2, 2003 guardian.co.uk Rebirth in Berlin - Schröder's reforms are a turning point The Guardian June 2, 2003 guardian.co.uk