Wednesday, October 29, 2008

Let's be like Europe: Coyote Blog dis-assembles Euro-style managerial capitalism

Read it here.

It's too long to repost, and too interconnected to do justice to with an excerpt, but here's a tease:

In the European labor markets, mobility is almost impossible. The union system is built to protect current high-skilled workers from competition from new workers, whether in the same country of from abroad. Large corporations that form part of the cozy governance of the country are protected from new competition, and are bailed out by the government when they hit the rocks.

As a result, unemployment is structurally high in countries like France and Germany, hovering for decades between 8 and 12% -- levels we would freak out at here. Young and/or unskilled workers have a nearly impossible time breaking into the labor market, with entry to better jobs gated through apprenticeships and certifications that are kept intentionally scarce. Joe the plumber is an impossibility in Europe. Some Americans seem to secretly love the prospect of not easily being fired from their job, but they always ignore the flip side -- it is equally hard to ever be promoted, because that incompetent guy above you can't be fired either.

Entrepreneurship in Europe is almost impossible -- the barriers just to organizing your own corporation legally are enormous. And, once organized, you will quickly find that you need a myriad of certifications and permissions to operate in your chosen field -- permissions like as not that are gated and controlled by the very people you wish to compete with. The entire political economy is arrayed in a patronage system to protect current businesses with their current workers.

Go; read; bookmark his blog.

1 comment:

Duffy said...

Exactly so. I lived in France for a short time and found that students getting ready to graduate college were frequently offered salaries less than the dole so there was no reason for them to work.

The structure there also leads to much more rigid class structures. The refrain is that one "should not try to fly higher than their wings will carry them."

Lastly, that system of regulations also encourages cheating which happens with abandon in certain market segments.