Tuesday, May 12, 2009

With friends like these

Besides my remarks earlier about the surprising applause lines, I was surprised by The Economist's extraordinarily limp defense of "the more liberal Anglo-Saxon model." "This newspaper stands firmly on [its] side," the authors declared in their p. 13 editorial, the editorial explaining the cover illustration of a French model grinning down at the Anglo-Saxon model from head and shoulders and indeed shoes above. And, in an article devoted to how unfolding economic outcomes have discredited the Anglo-Saxon model, the authors could find nothing about the current economic outcomes to say in defense of the model. Such loyalty, to loyally announce that you are paid to defend it! So damning of the Anglo-Saxon model that even those who take money to defend it can find no defense!

To pick on one passage, "Mr. Obama is right to admit that in some ways Continental Europe has coped well. Tough job-protection laws have slowed the rise in unemployment." This is probably literally true. But it's hard to imagine why people firmly on the side of the more liberal Anglo-Saxon model would choose to describe it in this extraordinary way. I don't know where to find comprehensive time series data, so I Googled for "France unemployment" and "USA unemployment" pages dated within the last month. Evidently in March official unemployment was 8.2% in France and 8.5% in the USA. This isn't good for the USA, but neither does it deserve mention as how Continental Europe has coped well. An 0.3% difference is well within the uncertainty of how unemployment should be defined, and measured, and compared across significantly different populations. (E.g., the two countries don't have the same age distribution, and the US doesn't participate in anything much like the intra-EU labor migration system.) In my opinion, it would be essentially as accurate to say "the crisis has caused US employment rates to rise as high as the chronically high rates of France." It might be worse for other Anglo-Saxon countries, but (1) Obama was specifically mentioned here, and (2) I don't see the definitive list of which countries are included in the Anglo-Saxon model basket and (3) even if the USA were the only one whose unemployment comparable to France, the USA will be a pretty sizable fraction of any possible basket. Thus, this statistic is a bizarre way to support the elevation of the French model.

There are all sorts of economic uncertainties about how bad the current economic problems will get. There are also all sorts of political uncertainties about how much further Obama and the Democratic Congress will move the USA away from "the Anglo-Saxon model." Perhaps in a few months the Anglo-Saxon economies will have suffered much more, and the Continental economies will have suffered much less. Perhaps over those months the US system will not have become significantly more Continental (e.g., not much more politicization of capital allocation, and no passage of card check with mandatory wage arbitration). If so, then perhaps a dirigiste triumphalist article like this could make a lot of sense. At this time, though, not so much, and it seems quite strange that people who profess to analyze the economy, much less people who profess to favor the Anglo-Saxon model, should choose to justify a cover image like with an article built on comparisons like this.


Post a Comment

<< Home