After all, Germany had the same “rigid” labor market in the 1960’s and the early 1970’s when its average unemployment rate was below 1%. Despite its modest reforms in the 1990’s, The Netherlands has a more generous benefit system, and stricter employment protection than Germany, yet it has a much lower unemployment rate. Similarly, Austria also combines low unemployment with high social protection and centralized bargaining. At the same time, labor market reforms in Belgium have not brought lower unemployment.

There are several studies arguing that high unemployment in the major European economies is due to low investment rather than to distorted incentives or rigid labor markets. (See here, here, and here, in addition to the New School study linked to by Lemuel Pitkin.)

john f. opie, I live in Germany as well. Personally, I don’t think that Gedmin’s article, either the bit quoted here or the piece as a whole, holds much water. Greater flexibility in the labor market is part of a solution, but only part. A significantly simpler tax code is also part of a solution. Serious efforts to reduce non-wage costs are also part of a solution. Reducing the corporatism in public life is also a part. Finding ways to make more Germans the first in their families to attend university is also a part. Making it easier to start a business is also a part. Also on this list are recognizing that not every village will survive, particularly in the East.

And let’s face it, except for Bremen and parts of the Ruhr area, a very high structural level of unemployment is an Eastern problem. That’s one reason why Berlin is so worrying: practically every other post-communist capital is a boom town. If you want to measure unemployment in Central Europe, there are two rules of thumb: the greater the distance from the capital, the higher the unemployment; unemployment rises in an almost linear fashion from west to east within a country.

So the fact that Berlin has such a high level of unemployment is worrying, because it suggests that the forces at work (or more precisely, the sum of choices made by individuals) in other post-communist parts of Central Europe are blocked in Eastern Germany. What the blockages are and what could be done about them are questions too complicated for a blog comment. And lattes don’t have much to do with it.

Gedmin is saying that hey, the market for decades has been able to withstand the burden of funding non-producers and redistributing great amounts of wealth, and that people have become complacent with a system that can’t last indefinitely with its current obligations. Any metaphor using children living with their parents money would be appropriate here.

Dude, efficiency is a second-order value. It has no moral weight in itself; it serves as a value to be pursued in context of a set of objectives which make a moral statement. A slave tends to be more efficient than a salaried worker; this does not mean slavery is more moral than capitalism.

If the Germans decide to, in comparison to the US, pursue the “good life” in exchange for a little efficiency, good for them. I think most of us would prefer to live our lives as if we work to live, rather than we live to work.

A job that requires training pays €700/month in Germany? Sorry, I find it hard to believe.

I do.

The German economy is stagnant, German politicians are incompetent, and a majority of the public votes for largesse to be paid for by the those who actually work and pay taxes.

The problems are well documented for the German-speaker in a book by Hans-Werner Sinn “Ist Deutschland Noch Zu Retten?”.

Put simply: Gedmin’s comments are spot-on. Germany is living on borrowed time: it cannot afford to continue to pay those benefitting from the system (retirees, those on the dole) with the income from those financing the system (all taxpayers in Germany). Germans are today where the US might be in 2015 or so: too many old people, too few taxpayers.

The problem is exacerbated by the fact – not opinion, fact – that qualified workers are leaving Germany faster than qualified immigrants are coming in. In other words, the quality of the workforce available in Germany is declining. The vast, vast majority of unemployed in Germany do not have any qualification – and this is critical in Germany, as anyone looking for work here will tell – and immigrants do not help.

Where I work we’ve been desperately looking for a trained econometrician with job experience: we’ve not been able to find one on the market for the last six months. One we did find didn’t want to move from Hamburg to near Frankfurt.

German unemployment is a structural crisis, since unqualified, unskilled labor cannot compete in Germany with unqualified, unskilled labor in China, Vietnam, Turkey, Hungary and Bulgaria.

And it’s not a function of lack of training opportunities: it’s a function of attitude. No one is willing to go train for a job that pays €700/month when you can be on the dole for basically the same price. Working off the books is vastly more rewarding than working legally due to heavy taxation not only of the worker, but also the mandated costs for an employer.

You can protest all you want that this is what the Germans want, but at the end of the day someone has to pay for it. And I have colleagues who are actively planning to emigrate because the burden is becoming onerous. And at least one colleague who is going to Switzerland to work because he will have more disposable income at the end of the day with the same salary than if he stays here.

John

Please. If “Western Europeans are spoiled rotten and have had it too good for too damn long” isn’t a “cherished belief” of the mainstream American media, I don’t know what is. As has been pointed out by several people in this thread, it’s been a staple of the NY Times for years. There is absolutely nothing daring or contrarian about Gedmin’s argument.

And (speaking for different chris here) I don’t think that anybody is telling taxpayers to shut up. They’re criticizing stupid arguments.

i’m curious, though, do you think that someone who pays taxes should shut up about how those taxes are used, just because he doesn’t agree with you?

“Stuff efficiency. More important questions: do the unemployed themselves think that their situation is better than low-paid work? If yes, will they regret it if unemployment goes on for a lifetime? What does it do to social mobility across the generations?”

What does earning the minimum wage, with no job security, and lousy health care, do to people over a lifetime?

As for social mobility, isn’t it higher in europe than the US?