Missing The Bus

Or if not the bus, certainly the bus driver. According to the latest UK Home Office estimates almost a quarter of a million (232,000) Central and East European workers have arrived to work in Britain over the past year, and everyone seems very content. Which has to lead you to ask: didn’t the German government make a major error in turning its back on this potential inflow of energetic young citizens? One more time New Economist has the full story.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

7 thoughts on “Missing The Bus

  1. Of course it did. On the other hand, it is somewhat questionable whether they would have found work in the rigid German labor market. On the other other hand, it is also true that the growing parts of Germany are having significant inward migration from a Central European, formerly Communist country–East Germany. On the other other other hand (don’t ask) there is also a significant number of Central and East Europeans working in Germany. They just aren’t in the legal economy.

  2. i drive for a food company in london who employ workers from everywhere and they are all hard working and friendly; what more could you possibly ask for ?

  3. @ tristan

    Love the photos, and your attitude to life which is strangely refreshing in such a cynical age.

    @ Doug

    Otoh, otoh… yes, quite a few mistakes when you look at it. Looking from the outside it seems it would have been much better if the old DDR had assimilated into the EU just like the other accession states. And the failure to legalise the undocumented eastern workers. Still, I suppose one day.

    But the issue is much bigger really. I think the main reason I am so strongly in favour of the labour market reforms is that I feel you will never convince people in France and Germany to accept major immigration while there is still 10% plus unemployment. On the issue of the reforms themselves, it is not so evidently win-win as some seem to imagine, as there are labour quality and productivity issues to factor in. Also the net worth of some of the jobs created may be questionable. So I see pro’s and con’s. Certainly, since I think Germany’s malaise is age structure related I don’t expect any ‘economic miracle’, some improvement on the margin perhaps. But the thing that really swings it for me is the immigration argument, if unemployment were down at 5% there would be a lot less resistance to immigration and then maybe you could get into win-win dynamics.

    Incidentally I don’t know if you’ve noticed but this week there has been quite a 180 degree turn of many of the commentators on the German outlook front. Over at Bloomberg and at the Economist, while we were debating why a ‘grand coalition’ might be negative for reform, some journalists were really getting excited about a German upturn. It’s worth looking at the coverage of this, and my comments, on New Economist, and Dave Altig’s MacroBlog. Now, today, with the Ifo sentiment index out, and retailers still very gloomy, everyone is re-writing their stock sheets. A week certainly is a long time in economics :).

  4. A week is a very long time when the best way to get coverage is to buck the conventional wisdom…

    Back in April, Daniel Gross did something I had never done and looked at the time series of the Ifo survey back to 1991. The article is good (though I hadn’t realized Ifo was an obscure economic indicator on a par with Baltic dry), and the gist is this: “Germans are always gloomy about their economic prospects. … In 171 monthly Ifo readings, Germans were positive about their future only 43 times. But this seems Panglossian compared with Germans’ assessments of their present situation, which have been optimistic only 15 times.” (Emphasis in original.)

    I think there are separate, though naturally related, issues in economic situation and acceptance of immigrants. Remember that back in the days of the economic miracle, Germany didn’t take in immigrants, it took in ‘guest workers.’ That’s a whole different kettle of gefilte fisch. So the cultural work of getting Germany to recognize its immigrant heritage and future will be necessary whatever the economic situation.

    (On yet another of those other hands, postwar Germany did an astonishing job of absorbing and integrating the millions of ethnic Germans who had been expelled from Central and Eastern Europe. In every material sense and in many cultural senses, these people were immigrants pure and simple.)

    My view of macro Germany is obviously influenced by my micro location – Munich. Growth here is steady, though not overheated as it was, say, 99-00. Places with the really high structural rates of unemployment, say, much of Mark Brandenburg or rural Thuringia, have very serious problems that are not likely to get better. People are going to keep leaving, as they have whenever they’ve had the freedom to do so in the last couple hundred years, and there’s not much to be done about it. Unless they get re-discovered as places to visit or retire, secular decline is going to be the overall story. It’s places like Bremen or Berlin that I find much more puzzling. Urban concentrations, high educational attainment, yet limited entrepreneurship and persistent unemployment. What gives? Berlin should be booming like any other post-communist capital. That’s a topic I’d sure like to understand more about.

  5. Without a flexible labour market immigrants are a burden. Only if Germany deregulates can it attract and make use of immigrants.

  6. It’s places like Bremen or Berlin that I find much more puzzling. Urban concentrations, high educational attainment, yet limited entrepreneurship and persistent unemployment

    Not as much educational achievement as other places. Sure they have some top scientific institutions especially in Berlin and some top people, but that is more than offset by a large percentage of the people who are functionally illiterate.

    Berlin should be booming like any other post-communist capital.

    A bloated public sector and loss of subsidies.

  7. And, come to think of it, Berlin is not an unchallenged capital in the sense, eg. Prague is. Germany is a decentralised country. The only postcommunist country with a comparable degree of decentralisation would be Bosnia, which is hardly a meaningful comparison.
    The closer analog to Berlin in the postcommunist countries would be a large provincial industrial town.

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