05-01-2005 21:34									#31
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quote: I suppose the patient-minded liberals tolerate it, as they know the pull goes in their direction (albeit slowly).

Hopefully, integration in the EU will solidify and accellerate this trend.



But I don't know if I would have the patience in their situation. Germany's system reacts extremely slowly.

	05-01-2005 21:46									#32
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Any system reacts extremely slowly.

	05-01-2005 22:29									#33
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OK. How about extremely, extremely slowly?

	05-01-2005 22:45									#34
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Spiffor's right: what happened to the evil tongue smiley?

	05-01-2005 23:18									#35
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quote: Originally posted by axi It's the same as productivity increases. Employees will have no incentive to increase their productivity more than their wages increase and definitely not since a stagnant work volume means productivity increase = unneeded staff = layoffs. Thus, while a higher productivity is desperately needed in times of recession, the only time to push for them is in time of economic boom.

Actually higher productivity makes recessions worse, because of the layoffs.

	05-01-2005 23:22									#36
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quote: Originally posted by axi Do you think the people are stupid? Do you sincerely believe that the working majority would ever concede to lifting restrictions on firing employees, during an economic recession?

The problem is once good times do come all the anti-reform types say the reforms aren't needed. The 90's were great times world wide, mildly ok times in Germany, but still little in the way of meaningful reform was accomplished. Yes, there will be lay offs if reforms occur but the sooner reforms are completed the sooner companies will make profits (by shedding excess labor) and the sooner they will start hiring again.

	05-01-2005 23:29									#37
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quote: Originally posted by DanS The fact that unemployment benefits were proportional to wages was a good feature of the system. We have such a system in the US and it helps people cover their large home mortgages, etc. The US has very generous unemployment payments compared to most other developed countries. However, the thing that was killing them was that unemployment benefits didn't expire. So you could have those proportional payments for a long, long time (forever?). As you say, there is no incentive to work. In the US, the congress usually extends unemployment benefits if there is a recession on, even though unemployment payments are only made for 3 months during OK economic times. So if we had a recession as long as Germany's, we might have been in a similar situation... In addition, in the US, people tend to hide out in the disability system to make it through tough economic times. Because of such country-specific quarks, I would be hesitant in making such precise comparisons across countries. However, I do think it's clear that Germany has a much worse unemployment picture than a lot of other places, including the US.

I don't agree with this supply-side analysis. It may be too hard to fire people in Germany, but ending people's unemployment benefits is only going to make things worse in a recession. You can't end a recession by trying to get people to work. That has been shown to be false time and time again.

	05-01-2005 23:30									#38
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Why should the workers be sacrificed for the economy? If someone needs to bled, let it be those who can afford it, not those who creat the wealth of society for a pittance.

BTW, our unemployment figures in the U.S. are crap. My unemployment benies ran out at the begining of December. I have no job. I am not counted as unemployed. There's lots of other people in my boat too.

BTW, bennies in the U.S. last 26 weeks, roughly six months. During the last recession, Congress extended them an additional 13 weeks, but because of the election, they didn't extend them again in 2004, cuz that would be an admission that the economy was still doing poorly. In previous recessions, Congress has extended benefits up to two years. In Bush senior's Admin, bennies were extended an additional six months, IIRC.

Bennies are proportional up to a point. It's 2/3rds your previous income, up to $275 (depending on the state) per week. so I was getting 1/6th my former pay. Enough to keep me in hearth and home, but little else.

Last edited by chegitz guevara on 05-01-2005 at 23:35

	05-01-2005 23:35									#39
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Chegitz, your problem is you believe in a system that would raise unemployment to 50% (source: Angola).

	05-01-2005 23:37									#40
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You get your facts about the German economy from a war torn African country Feziancarlo?

	05-01-2005 23:38									#41
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Unemploment benefits help in a recession, not hurt. I'm sure there is a point were that could reverse, but it's not likely in reality.

	05-01-2005 23:39									#42
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quote: Originally posted by Kidicious Actually higher productivity makes recessions worse, because of the layoffs.

I think you are missing the forest for the trees here, Kid. In the big picture higher productivity makes recessions less likely.

	05-01-2005 23:40									#43
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quote: Originally posted by Oerdin I think you are missing the forest for the trees here, Kid. In the big picture higher productivity makes recessions less likely.

No. Productivity impovements do nothing for stability, and can actually cause a recession.

	05-01-2005 23:42									#44
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quote: Originally posted by Kidicious Unemploment benefits help in a recession, not hurt. I'm sure there is a point were that could reverse, but it's not likely in reality.

For a short time, yes. But if you have them for a very long period of time, or forever, it would encourage people not to work. Sorry but communism doesn't work.

	05-01-2005 23:45									#45
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quote: Originally posted by Oerdin In the big picture higher productivity makes recessions less likely.

No it doesn't. Higher productivity is what causes recessions, as increased output isn't matched by increased demand. With an overabundence of goods available, profits slump, layoffs ensue, and bad times are had by all. At best, various economic measures can delay a recession. They cannot be prevented. They are part and parcel of the capitalist system, and we've had recessions every ten to seven years since 1825 (and even briefer period during the post-war period).

This isn't to say we should avoid higher productivity, but killing demand during a recessions (by killing benefits) isn't going to spur the economy on. It's going to make it worse as demand contracts with people having less money to spend.

It's not as if Germany's going begging for workers. Unemployment is measured by people actively looking for work. That means they aren't sitting on their asses sponging off the state, but trying to get a job.

	05-01-2005 23:45									#46
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quote: Originally posted by Giancarlo For a short time, yes. But if you have them for a very long period of time, or forever, it would encourage people not to work. Sorry but communism doesn't work.

By ending unemployment benefits you eliminate consumers. That's bad for recessions. If you create the jobs people will work. I've never believed that there are jobs out there, and people to work them that won't. If there is a job and someone to work it the person will be hired.

	05-01-2005 23:46									#47
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quote: Originally posted by Kidicious No. Productivity impovements do nothing for stability, and can actually cause a recession.

Ok, so in your opinion lower productivity leads to a better economy? Score another one for the kidaverse!

	05-01-2005 23:47									#48
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quote: Originally posted by Oerdin Ok, so in your opinion lower productivity leads to a better economy?

That's not what he wrote.

	05-01-2005 23:50									#49
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quote: Originally posted by Kidicious By ending unemployment benefits you eliminate consumers. That's bad for recessions. If you create the jobs people will work. I've never believed that there are jobs out there, and people to work them that won't. If there is a job and someone to work it the person will be hired.

The state can't create jobs that will benefit society (state jobs don't do anything to help). That is up to businesses. By increasing unemployment benefits you need to pay for it somehow... ah yes.. increasing taxes on people and businesses by driving businesses out. Example: California.

	05-01-2005 23:50									#50
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quote: Originally posted by chegitz guevara No it doesn't. Higher productivity is what causes recessions, as increased output isn't matched by increased demand.

In the short run, yes, higher productivity does mean fewer workers are needed to do the same job. In the long run it means companies and employees are better able to compete for available work and are more profitable, ergo, the companies are more stable and more likely to hirer additional labor. You might have more workers in a low productivity company but you will quickly have no workers after the company goes bankrupt; also each individual worker is worth more if he is more productive so he can be paid more.

	05-01-2005 23:53									#51
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There is so much bad economics in this thread (more than usual), the stench is starting to get to me.

	05-01-2005 23:54									#52
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quote: Originally posted by Oerdin Ok, so in your opinion lower productivity leads to a better economy? Score another one for the kidaverse!

Imagine that employers hire more in a recession so that producivity falls. Of course, that would be good for the economy. It would prevent the recession.

	05-01-2005 23:55									#53
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quote: Originally posted by DanS There is so much bad economics in this thread (more than usual), the stench is starting to get to me.

Another nice rebuttal DanS. It seems that you can only talk to people who agree with you.

	05-01-2005 23:56									#54
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quote: Originally posted by Oerdin In the short run, yes, higher productivity does mean fewer workers are needed to do the same job. In the long run it means companies and employees are better able to compete for available work and are more profitable, ergo, the companies are more stable and more likely to hirer additional labor.

Which is entirely beside the point. It is definately the case that increased productivity sets the stage for the next growth cycle, but increased productivity is what causes recessions. This whole libertarian notion that the economy comes out of each recession stronger is rather Darwinian, as it means ruined lives for many people. Why should a minority of individuals be forced to pay the brunt of economic cycles, rather than spreading the pain thin as they do in Germany?

Germany isn't hurting as bad as some Americans like to pretend. It's not like German companies are going bankrupt all over the place. And despite the fact that we have more growth (unless you read el freako's analyses) and make more money on average, Germans tend to have a better standard of living. I don't really think we're in a position to be telling Germany what to do economically.

	05-01-2005 23:56									#55
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quote: Originally posted by chegitz guevara That's not what he wrote.

He said "No. Productivity impovements do nothing for stability, and can actually cause a recession.". Productivity improvements most certainly lead to more stabilty, in the long run, by increasing profits and decreasing costs. This helps to make companies more competative and more likely to stay in business.

Yes, if you get sudden massive increases in productivity an employer won't need as many workers but let's face reality. Productivity normally increases at a slow but steady rate so you're not going to get enough lay offs to trigger a recession. The opposite is true; that increased productivity means the company wins more contracts and so must hirer additional workers.

	05-01-2005 23:57									#56
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quote: Originally posted by Giancarlo The state can't create jobs that will benefit society (state jobs don't do anything to help). That is up to businesses. By increasing unemployment benefits you need to pay for it somehow... ah yes.. increasing taxes on people and businesses by driving businesses out. Example: California.

Any job benefits society in a recession. The worker now has money to spend. That's good for everyone, and it's what ends a recession.

	05-01-2005 23:57									#57
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quote: Originally posted by chegitz guevara Increased productivity is what causes recessions.

Site?

	06-01-2005 00:00									#58
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quote: Originally posted by Oerdin Site?

Marx, Kenyes, Galbraith, Freedman, etc.

	06-01-2005 00:03									#59
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Oerdin,

There are two different ways that productivity improves. It is either supply side or demand side. Demand side productivity improvements do not cause recessions, but supply side productivity improvemenst can cause recessions. There were productivity improvements right before the Depression, and it was one of the causes.

	06-01-2005 00:04									#60
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quote: Originally posted by Kidicious Any job benefits society in a recession. The worker now has money to spend. That's good for everyone, and it's what ends a recession.

State jobs require money and that requires either taxing the citizens or businesses. I suggest a smaller central government is what is needed. Keynesism is stupid by the way.