Tuesday, June 15, 2010

All I need to know I learned from never trusting economists

Wall Street Journal:

Spain has been scrambling in recent weeks to convince markets that it can repair both its ballooning deficit and its troubled banking sector. Spain's Socialist government plans on Wednesday to begin pushing through a controversial labor-market overhaul that seeks to address a problem that many economists say is at the heart of Europe's economic malaise: rigid labor markets that dissuade companies from investing.
Many economists argue that the only way for such countries to rebound is for governments to unshackle their heavily regulated economies by making it easier for businesses to operate.

Spain "as a whole needs to become more competitive, and the labor market is one of its least competitive parts," said Fernando Fernandez, an economist and professor at Madrid's IE Business School.

The country has a two-tier labor market similar to those in France and Germany. One level typically includes older, skilled workers in jobs that pay well and are protected. The second consists of younger workers who earn less and can be easily dismissed. Critics say this system has resulted in high youth unemployment and argue that deregulating the first tier would lead to the creation of more and better jobs.

Insofar as economics is the art of delivering bad news to the public in the sunny dialect of investors, we may extrapolate from "jobs that pay well and are protected" to "the creation of more and better jobs" everything we need to know.


Anonymous said...

everything i needed to know about economics i (wished i had) learned right here.

ASP said...

economics is the art of delivering bad news to the public in the sunny dialect of investors

Excellent observation. Dismantling workers' rights becomes "deregulation" and even "unshackling" of the economy, while "more and better jobs" is meant to suggest there will be more of the better jobs although, of course, no such thing is said.