James Surowiecki looks at whether Europe has really earned all the criticism it's been getting for not responding aggressively enough to the meltdown [h/t CJW]:
[T]he biggest European countries, which have the most influence on policy, have not been crushed by this recession. In countries like Ireland and Spain, where huge housing bubbles burst, the devastation has been immense. But in Germany, where there was no bubble, fewer people are struggling with debt or watching their wealth go up in smoke. To be sure, Germany’s economy, which is heavily dependent on exports, is not in good shape; it looks set to shrink more this year than the U.S. economy. But the unemployment rate in Germany has risen much less than it has here. Indeed, in most of Europe job losses have been less severe, in part because unemployment was already quite high. The U.S. unemployment rate has risen nearly three percentage points since January, 2008. Europe’s is up barely one per cent.
In addition, since most European countries have an elaborate social safety net, a recession has a less dramatic impact on people’s daily lives. In the U.S., unemployment insurance pays relatively little and runs out relatively quickly, so losing a job usually means a precipitous decline in income. In European countries, unemployment benefits are typically substantial and long-lasting. This is not entirely a plus—it probably makes unemployment higher than it otherwise would be—but in hard times it keeps money in people’s pockets. (And paying for it means that European government spending automatically rises quite a bit during recessions.) Furthermore, universal health care enables Europeans to see a doctor even if they’re out of work
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So Europeans can avoid getting too deeply into debt and still reap some of the benefits of our borrowing. This is unfair: in effect, Europe is refusing to carry its share of the global economic burden and is piggybacking on us. But it’s hard to see how things could have turned out otherwise. The U.S. economy, much more than Europe’s, is like the proverbial shark: if it doesn’t keep moving forward, it dies (or at least creates a lot of misery). In some sense, we need economic growth more than Europe does. It’s not surprising that we’re going to be the ones who end up paying for it.
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