Wednesday, May 11, 2011

I blame myself. The headline tempted me and I read a Washington Post Editorial

I accept that they are right of center, but couldn't they at least be interesting (OK I blame myself again expecting something interesting from a committee).

They note that US manufacturing can now compete with Chinese manufacturing. They mention exchange rates in passing, before getting to the expression of ideoloty

"the U.S. commitment to free trade and flexible capital and labor markets — while politically and economically difficult to sustain — pays off over the long term. "

"flexible" means "less regulated". "flexible" US capital markets were fun in the short run and almost destroyed the economy in the long run.

Then they suggest that labor market "rigidities" cause low productivity in Europe.

"Europe, too, as the Boston Consulting Group report notes, because of that continent’s failure to reform its labor markets and raise worker productivity. Germany’s Siemens recently announced a $170 million investment that will enable it to build gas turbines more cheaply in Charlotte than in Shanghai.

" Here there is no mention of the level of labor productivity which is very high in Europe.

Throughout the Post editorial board ignores prices when it discusses costs. It is cheaper to produce in Charlotte than in Germany partly because a Euro costs $1.43 not say 80 cents.

Notably rapid employment growth in the USA is proof that "flexibility" is good as is a jobless recovery. For roughly the same rate of GDP growth the USA is A OK whether it has more rapid labor productivity growth or less rapid labor productivity growth -- that is if it has increasing productivity or rapid employment growth. Mathematically the conclusion must follow from all data provided there isn't another Wirtschaftwun der (sp ? who cares -- it's bad enough that I'm praising their regulations and unions, like hell I will learn how to spell their words).

Exchange rates are boring. The fact that a weak currency increases competitiveness is counterintuitive, and regulation and trade unions are bad by defnition. The conventional wisdom of the ruling elite. At least tea partiers come up with new expressions of ideology. I feel that I have read the editorial dozens of times before.

1 comment:

dilbert dogbert said...

Boston Consulting Group
Had to wash my mind and eyes out after reading those words.
Fuck the Boston Consulting Group. Evil Evil Evil.