Saturday, May 23, 2009

Europe and US - Converging?

The New York Times has another Floyd Norris nonsensensical economics article. Every day or so, the NY Times publishes an article in their business section purportedly to show why the US free market economy is a loser. Sometimes it is Paul Krugman, sometimes it is Bob Frank, sometimes, like today, it is Floyd Norris. These three economists share one thing in common -- they don't like capitalism and they can't stand to see others successful (other than themselves and their cronies). It is okay, in their opinion to make millions as a politician or selling political influence or trading on your political history (think of Tom Daschle for one of numerous examples), but it is a crime to get an MBA, work your way through the minefields of an investment bank, and make serious money.

The latest piece of silliness by one of these three free market bashers is Norris's diatribe today about the virtues of European laws that forbid employers to fire employees. Simple logic tells you that if the law doesn't permit you to fire someone, then you are not likely to hire them. It also suggests that when unemployment is growing worldwide, those who cannot legally fire anyone probably will have higher employment rolls, so long as they remain in business, than in countries where businesses can legally fire employees.

But logic isn't what Norris is about. He is about showing that, as the US economy weakened in 2009 it's unemployment rate is nearing the routinely high unemployment rates that prevail in Europe, in good times or bad times. For Europe, unemployment rates between 9 and 12 percent are the norm, not the 4 to 5 percent that prevail when the American economy is chugging along in good times. As Jack Nicholson once famously said: (for Europe), .."this is as good as it gets." It's like telling the healthy person who doesn't smoke or drink that he is no better off than the alcoholic smoker since both will eventually suffer the same end game.

Unfortunately, America has, in recent years, been adopting the European approach to toxifying employees. I don't doubt that if the US passed a law making it a capital crime to fire an employee, that the unemployment rate would not rise as fast in this country as it is currently rising. But, then, businesses would, over time, stagnate and collapse, which is pretty much the history of small business in Europe. If you are young and need a job in Europe, you have to get on a boat and go to another continent where the rules are different and you have some hope of getting a job.

For Norris to praise a system that has young people still out of work, looking for a job, and living at home well into their mid-30s, which is typical in Europe, is a sign that Norris is completely out of touch. Maybe some old geezer like Norris prefers laws that protect his job at the expense of the nation's youth, but then his is a policy of dividing generations, not improving economic conditions.

Before Obama, the US was the economic opportunity locale of the world. Post Obama, Norris might get his way. We may stagnate as badly as Europe has for generations. I guess that would make Norris, Krugman, and Frank happy.