The Speccie does seem to be running some dodgy economics pieces recently. Maybe Boris as Shadow Arts Minister means he’s taking his eye off the ball or something. This from Madelaine Bunting:
To cap it all, the hard work doesn’t even pay off; despite France’s implementation of a 35-hour working week, its productivity has continued comfortably to surpass that of Britain. The French tradition of the state regulating working hours has stimulated a more productive use of labour.
Err, have you noticed that France has an unemployment rate twice ours? That youth unemployment is over 20%? Could there even be a connection? Well, yes, there is. All to do with that mysterious subject, economics. On making a decision to hire someone or not a company, according to basic theory, will hire until marginal revenue equals marginal costs. If it costs more to hire someone than they produce that person will not get hired. So, if employment costs go up, say via a 35 hour week (note that benefits are a major cost of employment these days, not just hourly wages) then only those sufficiently productive to pay those higher costs will be employed. The rest languish on welfare. So, what would we expect to see in countries with high employment costs? High average productivity of those employed plus a large number of people not employed. What do we see in France and Germany? High average productivity in those employed and high unemployment. What do we see in places like the UK with lower social and benefit costs for employers? Lower average productivity of those in work and fewer unemployed. The difference in the approaches is that in the UK model those who are less productive are still priced into work.
So which is better? Your choice I guess. Me, I’ll go with the idea that all those who wish to work should be able to. That means reducing the costs on employers, so that those lower in productivity can still be profitably employed. This has the side effect, as noted, of reducing the average productivity of the workforce. Yet it does not actually make those more productive workers less productive. Rather we are averaging across a more diverse workforce. Plus, of course, several millions of people working for a living rather than being excluded from society, forced into the lumpen proletariat.
As I say, your choice.
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