Observations about European issues

It is interesting the way we form our opinions. We often read articles by writers who think like us. They do not violate our comfort zone. They just reinforce our beliefs, whatever they are. We do not want to be challenged.

Take, for instance, our views of Europe. We think they are performing more poorly than we do. Data, however, suggest they are growing at the same pace we are. Possibly faster. Their labor force is too rigid, we are told.

What to do? Europe wants to liberalize labor regulations. Workers should give up years of struggle to gain hard won rights. Their pension is insured. What’s wrong with this idea? Is our system better? We do not know if we will ever receive one as business gets into trouble.

But there is another angle no one talks about. Bashing workers does not necessarily make the economy grow faster. It would be too easy. The way to increase employment is to stimulate the creation of new businesses, not to dismantle labor regulations.

European business says they need to hire and fire when they want. By doing so they make more money. Will they improve employment? Maybe.

What about the idea to liberalize business itself. No, you cannot do that. Why? Because businesses and industries (many are state controlled) have their turf protected from new entries. Germany allows discount sales within strict limits. Sales on Saturday are also limited in some countries.

Magazines can only be sold by authorized newsstands. Pharmacies are allowed only outside a 7 mile radius from each other. And so on, and on, and on.

Let people start their own business when they want, without restrictions and bureaucratic paperwork designed to discourage would-be entrepreneurs.

Employment will soar. My point is that we focus on liberalizing the labor force, because this is what business wants. What about liberalizing the tight socialist and oligopolistic structure of industries in Europe. But we do not to talk about it. It violates our comfort zone.

(This Observations appeared in the 8/25/03 issue of The Peter Dag Portfolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

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