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Thursday, October 30, 2003

The Jury is Still Out

Following my post on sleeping-late-in-Denver yesterday, Joerg is in the mailbox, and asking some pointed questions:

I sure knew I would get to read something like that. What´s it with tough-talking conservatives? Stoiber just told the unions that he shares their opposition against raising the retirement age. Remember the deal the dockers got in the U.S. - after all the posturing by Bush? An increase of more than 20 000 $ in yearly pensions? Granted - previously they had been meagre. But that was really enormous and unprecedented.

And then there is a lot of reductions in weekly hours taking place in private industry. 30-hour week at Opel. A similar offer from Deutsche Telekom to the unions. 4-day workweek at health insurance organizations. But postmen are asked to work an additional eight hours per week.

It´s ridiculous. U.S. unions should ask for more leisure time, and the German ones for money. But they are not the driving force in this development - management is. Disposable income is stagnant or shrinking in both the U.S.and Germany, but in the U.S. the effect is mainly felt by the newly unemployed and an enormous number of temp workers, whereas here it is spread out more evenly.

Meanwhile, Prof. Sinn is once again calling for lengthening the workweek. He seems to be on a mental trip to Baghdad - a place where you have difficulty making phonecalls, getting your car repaired or your illnesses treated.

I am looking at public choice theory in an attempt to make sense of it all. I am seeing more and more evidence of what I would like to call the "lump of structural reform"-fallacy. There is no need to lengthen the workweek - but by calling for it, acceptance of pension reform may have been diminished. Another constraint on structural reform obviously is
that the political decision-making process is itself in need of reform - and may not be able to produce positive outcomes until it has undergone significant change. (But my view of this problem is probably very different from yours - I think that more consensus-oriented countries are actually at an advantage here. To me, it seems likely that the
deteriorating political culture in the U.S. is a major handicap. I am reminded of Weimar. To be sure, there are no street fights - but you wouldn´t expect those in the country of 8-hours-per-day-TV, would you? I would also like to point out that post-crash Japan didn´t go through the equivalent of America´s Great Depression. The jury is still out on how America is going to cope with its own millennial crash. Even if Bush´s deficit spending begets a boomlet, it might still turn out to be short-lived - like the one Roosevelt engineered.)

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