It’s always impressive to see one person excel in two widely disparate activities: a first-rate mathematician who’s also a world class mountaineer, or a titan of industry who conducts symphony orchestras on the side. But sometimes I think Paul Krugman is out to top them all, by excelling in two activities that are not just disparate but diametrically opposed: economics (for which he was awarded a well-deserved Nobel Prize) and obliviousness to the lessons of economics (for which he’s been awarded a column at the New York Times).
It’s a dazzling performance. Time after time, Krugman leaves me wide-eyed with wonder at how much economics he has to forget to write those columns. But today’s, on why America should consider European-style employment protection, is his masterpiece. It opens thus:
Consider, for a moment, a tale of two countries. Both have suffered a severe recession and lost jobs as a result — but not on the same scale. In Country A, employment has fallen more than 5 percent, and the unemployment rate has more than doubled. In Country B, employment has fallen only half a percent, and unemployment is only slightly higher than it was before the crisis.
Don’t you think Country A might have something to learn from Country B?
This story isn’t hypothetical. Country A is the United States, where stocks are up, G.D.P. is rising, but the terrible employment situation just keeps getting worse. Country B is Germany, which took a hit to its G.D.P. when world trade collapsed, but has been remarkably successful at avoiding mass job losses.
Alright, let’s stop right there. Here’s a comparison of employment on both sides of the Atlantic that I wrote for Forbes just a couple of years ago:
The average American works 25 hours a week; the average Frenchman 18; the average Italian a bit over 16 and a half. Even the hardest working Europeans—the British, who put in an average of 21 and half hours—are far more laid back than their American cousins.
Compared to Europeans, Americans are more likely to be employed, work longer hours (employed Americans put in about three hours more per week than employed Frenchmen), and, most importantly, take fewer (and shorter) vacations. The average American takes off less than six weeks a year; the average Frenchman almost twelve. The world champion vacationers are the Swedes at sixteen and a half weeks per year.
Of course, Europeans pay a price for their extravagant leisure. The average Frenchman produces only 3/4 as much as the average American, even though productivity per hour is slightly higher in France.
By Krugman’s logic then, perhaps countries B, C, D, E and F have something to learn from country A. But he seems to have overlooked that implication.
And exactly which brilliant European policies does Krugman believe the U.S. should now consider with favor? Among others, labor rules that discourage firing and incentives for “short-time work schemes”, where everybody puts in fewer hours. You’ve got to admire the effort it took to get from Nobel-quality economic analysis to the sort of stuff that economics professors around the world work so hard to drill out of their less talented freshmen. Among the things that Krugman has managed to forget are these:
- A really really really good way to get employers to stop hiring people is to tell them they can’t fire people.
- Putting people to work is not really terribly useful unless you put them to work productively. If they’re not producing, you might as well pay them to stay home. But imposed “short-time work schemes” are designed to diminish productivity. (In those cases where they can enhance productivity, employers have already adopted them).
If you want to increase employment by making each worker less productive, there are lots of ways to do it besides short-time work schemes. Instead of making them work half-days, we could require all manufacturing workers to work with one hand tied behind their backs. Or we could really handicap them by filling their brains with nonsense. Krugman to the rescue!
