>Doug's comment above also implies that some of Europe is evolving to
>socialism, somewhat, in that improved technological efficiency is allowed to
>shorten work time, increase leisure, and assuming less difference between
>rich and poor, less operation of the absolute general law of capitalist
>accumulation there than here.
>
>In this regard ,we might argue ( without falling into barracks/hairshirt
>communism) that fastest growing GDP ( in the US) is not necessarily the
>economic optimum.
[I didn't read this piece when I first saw it in the paper because I assumed it was the usual "Work harder, Europe!" crap. Liza did, and it isn't. Must be because it's from the IHT.]
New York Times - July 29, 2004
Love of Leisure, and Europe's Reasons By KATRIN BENNHOLD, International Herald Tribune
COPENHAGEN - Between mountains of suitcases and children racing each other with luggage trolleys at the airport of this Scandinavian capital, Maibritt Ditlev, husband, Anders, and daughter, Lotte, in tow, remarked that her whole country seemed to be going on vacation.
"In Europe we like our summer holidays,'' she said, emphasizing that even a lot of cash would not tempt her to give up her two-week trip to Iceland. In fact, she works part time because she treasures time off. "We have a nice house and can afford to go on two family holidays a year - what would we need more money for?''
This image of a casual Western European work ethic tends to be viewed with just short of scorn by the world's other wealthy economies. As Europeans like the Ditlevs happily continue to trade income for a slice of leisure time that would be unthinkable in the United States or Asia, the gloomy headlines about Europe's economic future multiply.
Europe, the standard criticism goes, has not matched the American expansion for most of the last decade and has even fallen behind Japan in recent quarters. Its citizens are on average almost 30 percent poorer than their counterparts on the other side of the Atlantic, according to the Organization for Economic Cooperation and Development, a group of 30 countries committed to democracy and the market economy. Potential growth in the next decade risks being stuck at 2 percent - one percentage point below that of the United States.
Is Europe, with the shortest workweeks and longest holidays in the world, doomed to lag behind, a victim of its penchant for more leisure and a too generous welfare state?
One response: If the answer is yes, then so what?
Some economists and European officials argue that, rather than reflecting a failure to catch up with its more industrious competitors because of faltering productivity growth, Europe's more modest income level mainly reflects policy choices that have tended to put a premium on leisure and equality at the expense of greater wealth.
Over the last half century, Western Europeans have gradually opted to work less and take longer vacations. They have put in place varying national versions of public universal health care, education and retirement benefits. They have set up a complex web of minimum income legislation, including unemployment subsidies and disability benefits, and basic social welfare, in an effort to limit the risk of destitution.
"The welfare state is an efficiency device against market failure,'' said Nicholas Barr, a professor of public economics at the London School of Economics. "It's a perfectly rational policy to accept lower output for higher welfare.''
Or as Joaquín Almunia, European commissioner for economic and monetary affairs, put it, for Europeans, economic growth is a tool, not an end in itself.
"We are not in a race with the U.S.,'' he said. "Our goal is not to grow as fast as the U.S. or anybody else, but to do what we need to protect our economic and social model.''
Plenty must be done to keep the system financed and the moral principles underlying it alive, Mr. Almunia said. The European Union faces challenges, including a stagnant, aging population, chronic underemployment and competitive pressures from the eight new Eastern European members and Asian growth markets like China and India. It has already missed many of the targets it set in its bid to become the most competitive economy in the world by 2010, as promised at a leaders' meeting in Lisbon four years ago.
As the German telecommunications giant Siemens showed by extending a union's work week to 40 hours from 35 with no extra pay, pressure is mounting to wring more work from Europeans, who put in an average of 10 percent fewer hours than Americans.
But for all the bad publicity the European economy receives, it is not performing that poorly. The combined gross domestic product of the 15 members of the European Union before the expansion on May 1 lagged behind that of the United States by about one percentage point a year in the last decade, largely because the region's population expanded at less than half the pace of United States'. The average income per person grew about 1.8 percent a year on both sides of the Atlantic, said to Kevin Daly, an economist at Goldman Sachs in London.
Contrary to conventional wisdom, Western European productivity growth outpaced that of the United States in the last 30 years: gross domestic product per hour in the European Union is less than 10 percent below G.D.P. in America today; in 1970 the gap was closer to 35 percent, said the European Union's Ameco database. In some countries, including France, productivity now exceeds that in the United States.
But if Europeans are still poorer than Americans, it is because fewer of them hold a job, and those who do have gradually reduced the time they spend at work. Americans have been much more hesitant to work fewer hours, keeping the tally virtually unchanged over the last 10 years despite strong growth.
"You have to ask yourself who really is the odd one out,'' Mr. Daly said. "Leisure is a normal good, and as you become richer, economic theory says that you consume more of it.''
Polls show that Europeans are by and large happy to pay high taxes in return for social services, and anecdotal evidence suggests that the concept of well being in Europe is less linked to material wealth than it is in the United States.
"Americans move from the 20,000 -square-feet house to the 30,000-square-feet house to the 40,000-square-feet house. It's a different mentality,'' said Kenneth S. Rogoff, an economist at Harvard University and former chief economist of the International Monetary Fund.
Enjoying coffee at a brasserie in Paris, Thomas Levassor, 28, said he worked in Silicon Valley as a software engineer for three years, but returned to France to have a family.
"There is a window of maybe five years where the American lifestyle is great - when you're young and healthy and ambitious and single,'' he said. "After that, other things become more important, like culture and family, and then you're much better off in France.''
Giuseppe Roma, who conducts society studies at Censis in Rome, says European shoppers are increasingly rejecting status-quo purchases to buy quality-of-life products.
The new attitude, he says is: "I care about the real quality of life. I may not buy Prada, but I will buy organic olive oil.''
Still, some economists say Europe's social model is costing it dearly. In a society that prides itself on egalitarian values, too many people are unemployed or outside the labor market, doubly raiding public coffers by not paying taxes and often receiving benefits at the same time. The jobless rate in the European Union's 15 old members rose to 7.8 percent last year, compared with 6.1 percent in the United States, said the Organization for Economic Cooperation and Development.
With a growing number of retirees, joblessness is increasingly straining the continent's state-financed pension and health systems: the combined burden is forecast to rise to as much as 8 percent of gross domestic product in most European Union member nations, the European Commission estimates.
Martin N. Baily, who led the White House Council of Economic Advisers under President Bill Clinton, says the important thing for European policy makers is to replace the concept of job security with that of employment security.
High minimum wages coupled with high payroll taxes and strict job protection laws have priced low-skilled workers out of the labor market in Europe's core economies, notably Germany and France, he said. Lowering both and paying low-wage earners a subsidy would achieve comparable income levels and make it cheaper for companies to hire.
Instead of an American-style anything-goes labor market, he said, Europe has its own success stories to learn from. Denmark, Sweden and the Netherlands have all increased employment beyond even American levels by conditioning generous jobless benefits on tangible efforts to look for work.
"The notion of social cohesion has tended to protect existing workers to the detriment of those out of a job,'' said Mr. Baily, a senior fellow at the Institute for International Economics in Washington. "But that doesn't mean that you have to dismantle the welfare state. There are European solutions for European problems.''
A generous welfare state does not only have costs. Europe has less child poverty, a lower incidence of illiteracy and a smaller prison population than the United States, Organization for Economic Cooperation and Development statistics show. Europeans have a slightly higher life expectancy and can hope to spend more of their old age in good health than Americans.
According to surveys by the World Database of Happiness, which is run by Prof. Ruut Veenhoven at Erasmus University in Rotterdam, the Netherlands, residents in many European nations are more satisfied with their lives than Americans and residents in more hard-working nations, like Japan, where people have been clocking even more hours than in the United States. More significantly, measures of happiness in the America and Japan has been flat over the last 30 years, while they have been rising in most Western European countries.
"The main difference with the U.S. is that we spend more time enjoying life,'' said Jorgen Ronnest, director for international affairs at the Danish Employers' Confederation, which represents about 30,000 companies. "And if you look around, maybe we don't need more refrigerators and more cars.''
Elisabetta Povoledo of The International Herald Tribune contributed reporting from Rome for this article.