In less than three weeks, 12 European countries will undergo monetary union, with the euro finally in circulation. Britain stands outside the euro zone, a topic of constant speculation and controversy. I’m generally pro-euro (and certainly pro-Europe), despite the misgivings of some economists I respect. But two recent articles that highlight how different the two other major European economies are give me pause.
Just across the Channel, France is gearing up for a presidential election next year. Prime minister Lionel Jospin is trying to stir as little trouble as possible. “He always seeks consensus and compromise when faced with social unrest whether striking lorry drivers, angry farmers or disgruntled pilots.” On the surface, that sounds a good idea, until you see the number of corners into which he seems to be backed. Although the labour market reforms instituted in the Thatcher era here were controversial at the time, now all political parties accept them as the norm.
Germany has very little labour unrest, and admirably high productivity. But that desireable combination has been bought at a cost. Germans work fewer hours than most others, as anyone who tries to call businesses or German government offices knows. For those in employment, the system undoubtedly works. But Germany has nearly 8% unemployment a figure that has proved remarkably stubborn, as joblessness in the UK and even France has diminished.
“In the 1990s we learned that another country’s faulty financial software can harm our Wall Street portfolios. On Sept. 11 we learned that another country’s faulty education software can destroy all of Wall Street.” Tom Friedman has been wandering off course of late, but he’s back on track.
I know I quote Martin Wolf too often. But he’s the only commentator in English who regularly tackles tough, international economic issues. Today’s another day of agreement with Martin: “The story of post-bubble correction is not yet over. It may have hardly begun.”