Over the past few weeks, I've noticed a number of Europeans criticizing America for having an unemployment rate of 6%. I smell a hypocrisy.

http://www.cepr.net/columns/baker/Eurounemploy.htm
http://www.tutor2u.net/economics/content/topics/europe/unemployment_introduction.htm
http://www.ac777.dial.pipex.com/bes/bes_autumn1999/sec10.htm

I could easily post a dozen other sources. Any of you Europeans care to explain why you keep saying American policies don't work when they're obviously performing much better than your own at controlling inflation and unemployment?

Rastor - Well, I'm not European and I think the current level of unemployment in the US stinks. Judging by the fact that there are a few apologists for the Bush economy I'd say that the old expression is true: "The difference between a depression and a recession is when your neighbor is out of work, then it's a recession; if you're out of work then it must be a depression."

I dont remember any European talking about the unemployment rate, nor have I heard anyone boasting about a superb brilliant European economy. My gripe with the US financial policies is as I have said before the dividing of the money and that it doesnt matter much if there is a low unemployment rate if people have to have 2-3 full time jobs to be able to support themselves. The economy is rather bad mostly everywhere and for me a fairish distribution of funds is something very important, I know you dont think so Rastor.

I would also like to say that Europe isnt one entity, there is as much difference, in all aspects, between Denmark and Portugal as there is between the US and Mexico. The EU is still a very weak overlay and if you want a correct image you should look at each country in itself.

I would also like to say that Europe isnt one entity, there is as much difference, in all aspects, between Denmark and Portugal as there is between the US and Mexico. The EU is still a very weak overlay and if you want a correct image you should look at each country in itself. Agreed, but all the countries in Europe have a much higher unemployment rate than the US.

My gripe with the US financial policies is as I have said before the dividing of the money and that it doesnt matter much if there is a low unemployment rate if people have to have 2-3 full time jobs to be able to support themselves.Unfortunately, I'm not as sympathetic as you. I don't have a problem with the economy because I understand the necessities of growth. More equitable distribution of income is more compassionate, agreed. It's a bad idea from a concept of economic growth, however, because that would indirectly lower investment spending, which is a significant portion of aggregate demand.

I don't think there is a solution to that. There always will be a massive difference between the richest and the poorest. The poor people can become richer if they put forth the effort, though. My only big issue with helping out others through transfer payments is that many people abuse the system, and I really don't feel like having my money going to support some guy that is too lazy to go out and earn money. I'm all for providing financial aid for people that are trying to be a benefit to society, though.

Chandos, I think you'll find that it's currently only a few sectors that are experiencing much unemployment (which has been declining rapidly, BTW). Since you seem to be a monetarist in economies, let's say that wages are not flexible downward in America due to a number of laws and then we contract out to much cheaper people elsewhere.

Rastor - In my industry, computers, they are already doing that at a high level. Dell and Compaq/HP have gone to India for outsourcing support. None of these guys have any loyalty to the American worker; they only understand the bottom line. That is one of the reasons I despise them so much.

We don't criticise US policy in that particular area here. We have 25% unemployment here (the government will probably say 15-20%), which sucks, and we fail dramatically in all related fields. That is because we've been governed by smartass thieves and dumbass hero wannabies resembling a mafia more than normal political parties. We just need a monarchy or a decent dictator.

I don't know about other guys, but I surely as hell oppose mass firing of people for company's own reasons. They buy up their enemy and sack everyone (you know, they can't support so many superfluous jobs etc) and then they hire new people to do exactly the same job. Sometimes even for more money (money being another reason given for closing jobs). If you protest, you can always get a low grade on your efforts, you can always be officially sacked for disciplinary reasons etc etc. They do the same here in whatever they can buy. Citibank is an outstanding example. I'm getting quite personal when it comes to them.

Citigroup? They're considered one of the most stable and made the 'Best Companies to Work For' list for at least 5 years in a row.

Chandos, think up some way to get American Workers to work for pennies an hour, and you'll see that the companies actually do prefer American Workers. That's why education is so important now (but that's another topic).

I ask you this, do you always look for the lowest price if you want work done on your car? For that matter, would you rather pay more or less for a product that is identical?

As an alternative, this paper argues that we can best understand European unemployment as a macroeconomic phenomenon, with the impact of contractionary policies transmitted across national borders. Specifically, the disinflationary policies of the 1980s and 1990s have had a predictable effect on unemployment. We constructed a set of estimates of the predicted impact of foreign growth on national unemployment rates. These estimates suggest that slow foreign growth was a major factor in the rise of unemployment rates across Europe in the last two decades, explaining in many cases 20%-30% of the actual rise in unemployment. These estimates do not include the direct, national, effects of contractionary macroeconomic policy, and lead us to conclude that macroeconomic forces are the principle cause of high European unemployment.

While we did not develop a full model to explain the rise of unemployment in Europe, the most perfunctory examination of monetary policy would suggests an obvious villain. Even after a recent cut in interest rates, the real short-term interest rate set by the European central bank still stands at more than 1.5%. For much of the last decade, the various European central banks were holding real short-term interest rates in the range of 3.0%-4.0% in order to bring inflation rates down to the levels required by the Maastricht accords. That persistently high real interest rates led to slow economic growth and high unemployment should come as no surprise to macroeconomists. In striking contrast, the Federal Reserve Board, under the leadership of Alan Greenspan, allowed the real interest rate to fall to zero in 1992 and to remain at zero for nearly two full years. This was in response to a much less serious problem of unemployment and excess capacity than is currently confronting Europe. The United States has benefited enormously from the Federal Reserve Board’s willingness to ignore the consensus on NAIRU in the conduct of monetary policy.

The evidence for the high European NAIRUs claimed by the OECD and other economists is not nearly as strong as it was for the range previously accepted in the United States. Europe's weak recovery since about 1997 has further undermined the credibility of conventional estimates of the NAIRU for many European economies. Inflation appears almost uniformly low and stable across the OECD. This recent evidence suggests that the NAIRUs held up as a constraint on macroeconomic policy lack a solid basis in either theory or evidence.

Under such circumstances, European economies should have little reason to treat such estimates of NAIRU as a constraint on macroeconomic policy. European nations have an enormous amount to gain, and very little to lose, by following the same path pursued by the Federal Reserve Board. The adoption of the Euro and the change in governments across the continent remove many of the obstacles to international macroeconomic coordination that may have existed previously. The current political situation offers an opportunity for a coordinated expansion that may finally bring an end to the period of high unemployment across Europe. It would be tragic loss if, at this historical moment, the new governments in Europe could not even show as much courage as Alan Greenspan.

I don't know why. From my belly, I'd like to see some devaluation of the Euro. But the European central bank seems to be quite confident about what they're doing. They hold steady to the stability pact, which mean stability of the currency is most important. And the prohibition of too big budget-deficits. Ironically, the Germans were among the ones who absolutely wanted rigid budget-provisions. Now they want them gone. Whatever, the central bank absolutely wants to stay with it's anti-inflation course.

As what the whole think means, they are principally two lines of thought I know of. 1. This is a lasting downturn. 2. This is a huge "re-structuring", inclusive reformation of the system in many countries, particularly Germany, when over, everything will look brighter.

As for reforms, which will certainly have to come and will come, I do not think that they include a approachment to any more laisser-faire leaning systems. The system which most European countries have was first introduced by Germany 1884. It didn't hinder their economic success which started with the founding 1871, obviously.

Germany has an intesting problem, which makes more similar to Italy, which had this problem since the Italian-unification. The inclusion of East-Germany seems to be rather difficult and expensive. The former west Germany, mainly the south of it, still looks rather good, whilce unemployment in East-Germany is a whooping 1/4. The same for Italy. Northern-Italy has always been an economic powerhouse, while the south spoils the statistic, and has about the double-unemployment numbers then the north.

So, yeah, I do not know exactly. It's either absoulute decline or re-structuring.