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>The thing that really hurt the Eurozone was the 2011 - 2013 recession that the US did not experience. This is true, but understated in a crucial manner. By gl

by scythe 3y ago

>The thing that really hurt the Eurozone was the 2011 - 2013 recession that the US did not experience. This is true, but understated in a crucial manner. By global standards, the greatest enduring strength of the US economy has been its ability to recover from downturns. More than anything else, that has pulled it ahead of competitors time and time again. When the early '80s financial crisis hit Japan with a lost decade, Volcker (PBUH) pulled the US out of the doldrums and back into a growth phase within three years. When the Asian financial crisis hit at the same time as the dotcom bust, the US recovered more efficiently than the erstwhile "Asian tigers". When the 2007 financial crisis went worldwide, aggressive measures by the Fed and a willingness to risk inflation restored growth faster than in Europe. When COVID hit, economies around the world dived, but even with political divisions running at their highest since 1876, the US again restored growth more quickly than almost anywhere else — now growing at competitive rates with China. There are a variety of theories about this, but one iniquitous postulate I've heard is that the US makes it a lot easier for companies to do layoffs — not a happy proposition for those directly affected, but what could be worse for an economy than having thousands of people working on something that just isn't working? Many worker protections — for health, safety and family — have become more popular with economists recently, but when the subject of being able to fire people comes up, there is still a sort of grim understanding transmitted in whispers: paying someone who isn't making progress makes us all worse off in the long run. Of course we can also trace the roots of some profound social malaise — including the collapse of whole cities — to the cutthroat nature of employment in America; there is no free lunch.

pasabagi 3y ago
I'm not sure about your 'iniquitous postulate'. If such a correlation existed, you would expect all countries with weak employee protection to enjoy economic growth that is better than their peers. That doesn't seem to be true. If you look at the employment protections of the UK[0], and compare them to the US[1], they seem fairly similar. And yet, the UK has very low worker productivity, worst-in-class economic growth, etc. The problem with taking general economic lessons from the US is that the US is in a unique, and uniquely advantageous economic position.
- nvm0n1 3y ago
  They aren't that similar. US has at-will employment, it's very straightforward. In the UK that's only true for a short period, then Euro-style worker protections start kicking in.
  - pasabagi 3y ago
    That depends on the kind of contract you have. Comparing different legal systems and different practical implementations of those systems is hard - but I think the basic claim, that there's a inverse correlation between employee's rights and economic growth, isn't visible within the EU or elsewhere. The UK is a good example because they have aggressively reduced the safeguards for workers (between 2014-2017 it was essentially a state with no safeguards if you could not afford the employment tribunal process), and is also an example of consistent poor economic growth.
    - cjrp 3y ago
      I'm confused, isn't an employee tribunal free? Or do you mean it wasn't between 2014-2017 and has become free since?
      - pasabagi 3y ago
        It wasn't free between 2014-2017. They changed the law to make it cost about a thousand bucks, then the highest court struck the change down as unlawful.
    - nvm0n1 3y ago
      It's silly to claim British companies were flouting employment law on a massive scale just a few years ago. That wasn't the case, especially as even pre-2017 legal costs were awarded to the winner and you can get a year's wages as winnings. There's a big gap between the US and UK in this regard. The UK has and enforces the concept of an unfair dismissal as distinct from being fired due to discrimination. The US has the latter but not the former. In the UK you can't lay someone off if it would be unfair or if your dismissal process was unreasonable, where unreasonable can mean purely bureaucratic reasons like not following your own dismissal checklists. In addition British employment tribunals are very worker friendly, resulting in frequent bizarre outcomes [1] like: - "A worker who was absent for 808 shifts over a 20-year career – costing the firm an estimated £95,850 in sick pay – has won tribunal claims of unfair dismissal against his former employer." (employee won because employer didn't follow their own absence management procedures). - "An office manager was discriminated against after she was told she was not allowed to work remotely from her son’s hospital bedside", deemed unfair because the boss "gave her views no credit" and "had a closed mind". - "Worker unfairly dismissed for complaining about boss on Facebook, tribunal rules" - An NHS worker who resigned won an unfair dismissal claim, because her workers had played a practical joke on her at one point and didn't like it when she complained. - A lecturer accused of sending “aggressive” messages to colleagues was awarded £15,000 for unfair dismissal after an employment tribunal ruled there had not been a proper investigation into the allegations made against him, whilst also concluding that he had indeed sent aggressive messages. The idea that this is a country that's "aggressively reduced safeguards for workers" will seem blinkered to the Americans on this site, who can be fired with zero notice and for any reason at all, with recourse only available if it can be proven to be sexism/racism/union organizing/etc. Winning huge awards because you weren't allowed to work remotely hardly exists there. [1] https://www.peoplemanagement.co.uk/article/1747159/worker-absent-800-shifts-during-career-unfairly-dismissed-tribunal https://www.peoplemanagement.co.uk/article/1747159/worker-ab...
dougmwne 3y ago
A lot of that ability to pull out of recessions is due to a central bank that can lower rates more than other countries without risking inflation. I suspect this is due to the USD’s status as world reserve currency, if we print too much there’s a whole global market for dollars. If we inflate a little bit, we take not just from our own citizen savers but from governments and citizens all over the world. It’s like we get to tax the whole planet and spend at home.
modo_mario 3y ago
Those other countries do not have a world reserve currency. Them adjusting monetary policy is not big enough to contribute to something like the arab spring, their imports aren't in essence subsidized by their nation peers, etc.

by scythe 3y ago

pasabagi 3y ago

I'm not sure about your 'iniquitous postulate'. If such a correlation existed, you would expect all countries with weak employee protection to enjoy economic growth that is better than their peers. That doesn't seem to be true. If you look at the employment protections of the UK[0], and compare them to the US[1], they seem fairly similar. And yet, the UK has very low worker productivity, worst-in-class economic growth, etc. The problem with taking general economic lessons from the US is that the US is in a unique, and uniquely advantageous economic position.

nvm0n1 3y ago
They aren't that similar. US has at-will employment, it's very straightforward. In the UK that's only true for a short period, then Euro-style worker protections start kicking in.
- pasabagi 3y ago
  That depends on the kind of contract you have. Comparing different legal systems and different practical implementations of those systems is hard - but I think the basic claim, that there's a inverse correlation between employee's rights and economic growth, isn't visible within the EU or elsewhere. The UK is a good example because they have aggressively reduced the safeguards for workers (between 2014-2017 it was essentially a state with no safeguards if you could not afford the employment tribunal process), and is also an example of consistent poor economic growth.
  - cjrp 3y ago
    I'm confused, isn't an employee tribunal free? Or do you mean it wasn't between 2014-2017 and has become free since?
    - pasabagi 3y ago
      It wasn't free between 2014-2017. They changed the law to make it cost about a thousand bucks, then the highest court struck the change down as unlawful.
  - nvm0n1 3y ago
    It's silly to claim British companies were flouting employment law on a massive scale just a few years ago. That wasn't the case, especially as even pre-2017 legal costs were awarded to the winner and you can get a year's wages as winnings. There's a big gap between the US and UK in this regard. The UK has and enforces the concept of an unfair dismissal as distinct from being fired due to discrimination. The US has the latter but not the former. In the UK you can't lay someone off if it would be unfair or if your dismissal process was unreasonable, where unreasonable can mean purely bureaucratic reasons like not following your own dismissal checklists. In addition British employment tribunals are very worker friendly, resulting in frequent bizarre outcomes [1] like: - "A worker who was absent for 808 shifts over a 20-year career – costing the firm an estimated £95,850 in sick pay – has won tribunal claims of unfair dismissal against his former employer." (employee won because employer didn't follow their own absence management procedures). - "An office manager was discriminated against after she was told she was not allowed to work remotely from her son’s hospital bedside", deemed unfair because the boss "gave her views no credit" and "had a closed mind". - "Worker unfairly dismissed for complaining about boss on Facebook, tribunal rules" - An NHS worker who resigned won an unfair dismissal claim, because her workers had played a practical joke on her at one point and didn't like it when she complained. - A lecturer accused of sending “aggressive” messages to colleagues was awarded £15,000 for unfair dismissal after an employment tribunal ruled there had not been a proper investigation into the allegations made against him, whilst also concluding that he had indeed sent aggressive messages. The idea that this is a country that's "aggressively reduced safeguards for workers" will seem blinkered to the Americans on this site, who can be fired with zero notice and for any reason at all, with recourse only available if it can be proven to be sexism/racism/union organizing/etc. Winning huge awards because you weren't allowed to work remotely hardly exists there. [1] https://www.peoplemanagement.co.uk/article/1747159/worker-absent-800-shifts-during-career-unfairly-dismissed-tribunal https://www.peoplemanagement.co.uk/article/1747159/worker-ab...

dougmwne 3y ago

A lot of that ability to pull out of recessions is due to a central bank that can lower rates more than other countries without risking inflation. I suspect this is due to the USD’s status as world reserve currency, if we print too much there’s a whole global market for dollars. If we inflate a little bit, we take not just from our own citizen savers but from governments and citizens all over the world. It’s like we get to tax the whole planet and spend at home.

modo_mario 3y ago

Those other countries do not have a world reserve currency. Them adjusting monetary policy is not big enough to contribute to something like the arab spring, their imports aren't in essence subsidized by their nation peers, etc.