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Old Europe Works


bear.jpg"Call me crazy, but I find the obsession with Gross Domestic Product in economic commentary to be odd, not to say perverse." By Max B. Sawicky

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Max B. Sawicky

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May 24, 2007 - 12:43 am

Call me crazy, but I find the obsession with Gross Domestic Product in economic commentary to be odd, not to say perverse. Would you count yourself better off if you worked 75 hours a week instead of 40? Not necessarily, since time not working is valuable. Of course, sometimes you want the work, so the choice has value as well.

Our economic accounts place a zero value on leisure time, vacation time, time spent caring for children or for Grandma. Zero. Even worse, in the U.S. debate, nations that make a social choice in favor of shorter work weeks and longer vacations are scorned. It’s as Josef Stalin had been reincarnated as some demented industrialist. “Work harder, you bastards!”

Which brings me back to France. I love France. J’aime la France beaucoup. Comprenez vous? I’ve been there. I can’t wait to get back. My daughter has been in a French immersion program since kindergarten. We were worried about her keeping up in English later on. No problem. A few kids fell out of the program, but not many. Every child should have a chance to get bilingual.

France gets a lot of flack for its foreign policy, but that’s a subject for another day. In my previous Pajamas column, I noted the comparability of labor productivity in France to the U.S. and some people said, what about unemployment. So let’s get to it.

A key study is here, another here. We learn that among social-democratic nations, there are some with big welfare states and unemployment on par with the U.S. (Austria, Denmark, Netherlands, Norway, and Sweden). There are also countries with similar rates and moderately larger public sectors, such as Great Britain, Canada, and Australia. The problem states, relatively speaking, are Belgium, Finland, France, Germany, Italy, and Spain.

One problem with comparing the rates is that definitions of “unemployed” differ across nations. A backwards illustration of the problem lies in the fact that by these data, Mexico has lower unemployment rates than the U.S.! Unbelievable. A further difficulty is that some countries change their own methods, so a rate in one year does not necessarily compare to the same rate at another point in time.

Blogger and Guardian columnist Daniel Davies, a.k.a. “D-Squared,” noted how easy it would be for France to reduce its unemployment rate:

” . . . [R]educe the student grant, but make students eligible for unemployment benefit. On top of this, make all other state benefits for 20-24 year olds conditional on actively looking for work, in some half-defined fashion. This will immediately increase the measured labour force participation rate of French 20-24 year olds. Since the unemployment rate is defined as the unemployed population relative to
the labour force, the increase in the denominator will bring the unemployment rate down at a stroke.”

One way to evade definitional problems is to compare employment to population, leaving out the squirrelly youth age bracket. If you look at the 25-64 age group, you find that the U.S. rate in 2005 was 79.3, and in France it was 79.6. I have deliberately cherry-picked a year to show that the U.S. is not always ahead of France. Of course, sometimes it is.

Is France without problems? Of course not. It obviously needs to better integrate minorities into the workforce and educate immigrant youth. Sound familiar?

On the vacation front, since my last bit on that subject some updates have been published. The U.S. remains an outlier in failing to mandate any paid vacation for workers. Consequently, one in four U.S. workers get no paid vacation or holidays.

Some took umbrage at the idea of the government forcing employers to provide any benefits on the grounds that the worker should have the choice of trading benefits for money wages. This would indeed have some value insofar as it would be possible. But by the same token, some workers who are not permitted to take any paid time off would like the opportunity. If they can’t find a job with that possibility, they lose out. So whichever way the Gov moves, somebody is disadvantaged.

The U.S. chooses to work more, the French to work less. Are they wrong?


Max B. Sawicky is an economist at the Economic Policy Institute. He has worked in the Office of State and Local Finance of the U.S. Treasury Department and the U.S. Advisory Commission on Intergovernmental Relations. He is a member of the National Board of Americans for Democratic Action and serves on the editorial advisory board of Working USA. He is a frequent contributor to TPM Cafe.

Sawicky’s page can be found at Max Speak, You Listen!

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