Home > The Economy > Southern European workers versus Northern European workers: 5 charts

Southern European workers versus Northern European workers: 5 charts

from David Ruccio

Are Greeks and southern Europeans lazy free-loaders who deserve the austerity measures currently being imposed on them by their governments and European creditors?

That’s certainly the story that circulates, even among many otherwise right-minded individuals. But Kash Mansori has run the numbers and that’s now what he discovered.

He finds, for example, that southern Europeans tend to work more hours each year than northern Europeans and that, with the exception of Italy, the percentage of the population that is an active part of the labor force is generally similar to labor force participation rates in northern Europe.

In addition, some southern European countries, such as Greece and Portugal, had improvements in labor productivity roughly equal to northern Europe, while Spain and Italy, which did not run particularly large budget deficits, are the ones that lagged in productivity growth.

Finally, both social spending in general and old-age benefits have tended to be higher in the north than in the south.

A serious political economy of the debt crisis in southern Europe has to start, not with myths about work habits and government expenditures, but with capital flows into the south from the north, the financial crisis that began in the United States, and with the success of wealthy individuals and large corporations in some countries of southern Europe (remember, Spain was running a fiscal surplus prior to the crisis) to resist paying taxes to finance fiscal deficits.

Southern European workers—those who are employed and the growing ranks of the unemployed—understand that, which is why they are working so hard to overturn the Draconian austerity measures being imposed on them.

  1. Merijn Knibbe
    October 24, 2011 at 10:06 pm

    To an extent, this kind of behavior is of course plain old denial: not looking at/not comprehending/not seeing those facts which do not fit your preconceived ideas. Very human.

    But to an extent the situation is worse. Economists are in fact trained in using a-priori assumptions to reach conclusions – however at odds with the data these conclusions might be.

    An example: Claudio Borio (via Ryan Avent), of the Bank of International Settlements, who is against prolongued easing after the bust as “the easing tends to favour investment in the very longlived assets in excess supply (eg construction)”.

    Yes – according to this man we have to be afraid for a building boom, at this very moment. And we have to increase interest rates to prevent this boom. But is he right? No. He is wrong. He is utterly wrong. Het is completely, utterly wrong. He is totally, completely, utterly wrong. At least, according to the data. New housing starts in the USA are less than a third (not a third less, no, less than a third) of their level in 2006/2007 and about 40% of the 2002 level. And construction in Europe is down, too.

    http://forecastchart.com/chart-housing-starts.html

    http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-19102011-BP/EN/4-19102011-BP-EN.PDF

    That is what a zero lower bound looks like – interest rates are not low, they are high, when it comes to houses, taking house price deflation into account. Which moron will take a 3% mortgage to buy a house which declines 5% in value, each year… Why, o why don’t they teach all economists double entry accounting in stead of DSGE models.

    http://www.economist.com/blogs/freeexchange/2011/10/monetary-policy-2-19102011-BP/EN/4-19102011-BP-EN.PDF

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