4.2% Unemployment

[Max B. Sawicky]

>>
I'm curious about the feeling among the social democratic left in Europe
about deregulation. As you say, the low unemployment rate here is a
powerful bludgeon against the European social welfare systems. But there
is a quite convincing argument that the problem in Europe has more to do
with the monetary and fiscal policies demanded by Maastricht (and with
the behavior of the Bundesbank in the '80's) than with "inflexible"
labor markets and the like. At the very least, a reflationary
macroeconomic program should be tried before the Europeans junk a quite
successful system. . . . >>

I'm curious about this too.  We'd been telling Europeans to go after
the Bundesbank (and now the ECB) for some time and it's only been
relatively recently that there is some receptivity.  Many of them,
smelling political success, are tempted by Clintonism (tight money,
low deficits, and lots of blather about human capital and the
"information age.").

I wrote two papers on the irrelevance of taxes to the Euro unemployment
situation, if anyone is interested.

EPI has a book called "Beware the U.S. Model" which speaks to the
alleged trade-off between high wages/regulation/taxes and employment.
See our web site for details (epinet.org).

mbs