>Doug suggests that my initial supposition is not right
>and that this makes irrelevant the question of how to
>explain the correlation that isn't there. But isn't it
>there? It isn't as dramatic as I thought, but in 2003
>the US was two full percentage points below Europe in
>unemploymenrt, or to put it another way, 25% lower.
>That's way outside two standard deviations. Now, the
>phenomenon of high unemployment in low wage EU
>countries suggests that the Standard Economic
>Explanation of the difference isn't right (by itself),
>but there is still omething here to be explained.
Its more complicated, obviously, but there is something to the argument that low wages make workers a little bit more attractive. In the short term.
Productivity is the basic issue though. If you have to pay a bit more, but you get a lot more productivity for your money, then that is better from the intelligent boss's POV. It follows that, if the statistical comparison between the US and Europe is an accurate reflection of the real world (something I take with a grain of salt) then it probably indicates a comparatively less productive US workforce. Amongst other things.
Lower wages (including social wages such as pensions, health care, education etc) for US workers would inevitably lead to them being less productive of course. That's fundamental economics, as in if you pay peanuts you get monkeys. In the long term. Because of course there isn't enough nutrition in peanuts to maintain productivity.
Lower wages for US workers means that US workers can't afford to maintain the skills and productivity advantage they used to have over workers in the rest of the world. Education and training has to be paid for and if the wages available don't justify the investment, the investment won't be forthcoming. The US will slowly decline, its a slippery slope.
That's what happened to ancient Rome. The US ruling class is on the same course.
Getting back to the statistics though, there's a couple of things you have to be cautious about. Firstly, the way most (all?) OECD countries measure unemployment these days is pretty suss. The surveys ask people if they have worked an hour or more in the last month (including unpaid work in a family business as I recall it.) if you answer yes, you are counted as employed. You are also not counted as unemployed if you haven't actually looked for work. Its rigged to minimise official unemployment, in other words.
The result is that, in places with a welfare system, an anomalous situation is often created where there are more people on the dole than there are officially unemployed. It isn't that easy to get the dole, so obviously the unemployment statistics are dodgey.
So you have to keep in mind when comparing unemployment statistics between backward places like the US and modern welfare states, that the unemployed in welfare states are actively forced to look for work to retain eligibility for their welfare. So, even if they have less than a snowball's chance in hell of actually getting a job, they are required to go through the motions. They are very unlikely to answer "no" to the question put by someone from the government who comes around asking if they have looked for work in the last month.
So they will be counted as unemployed.
Whereas someone in a backward country without a welfare system has nothing to lose. That person probably makes a living from petty crime, rather than bullshitting the government.
Bill Bartlett Bracknell Tas