Monday, May 21, 2012

Newspeak, Europe and economics

The German representative on the board of the European Central Bank (ECB), Jörg Asmussen, says that the debate on growth versus austerity is the "wrong debate" since "we [who?] need both." Of course what he means by growth measures is labor market reforms, meaning more flexibility to fire workers (yes with more than 20% of unemployment in Greece and Spain, and double digits for the eurozone it seems that firing workers is really hard in the old continent). That would supposedly reduce the cost of workers, i.e. lower wages, and, as a result firms will hire more workers, even if nobody is buying their goods. And you wonder why things are the way they are in Europe?

PS: For a debunking of the idea that labor market flexibility is necessary for full employment, or that labor market protections cause unemployment, read this paper.

2 comments:

  1. This paper also adds some things about the issue.
    http://oit.org/public/english/bureau/inst/publications/discussion/dp16005.pdf

    Pablo

    ReplyDelete
  2. Now if we could just get rid of unemployment it would really make those lazy workers more "competitive"!

    ReplyDelete

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