“I don’t think I ever said or implied that.”

No you didn’t and I apolgise if that could be construed from my post.

What worries me is that the claim made or implied by others that opposition to joining the Euro is just a “Conservative” thing is regularly deployed to close down rational discussion of the Eurozone’s undoubted problems. Notoriously, Blair uses that rhetorical device in the British Parliament.

I don’t think I ever said or implied that.
I don’t begrudge anybody their scepticism about anything.

For myself, I’m more sceptical of the Dollar than I am of the Euro, and of the governments that stand behind those currencies…but that’s just me.

It seems that opposition in Sweden to joining the Euro has increased since the referendum there last year.

The latest news update:

“Eurosceptics in Sweden are to form a new political party and to present it within two weeks, according to Swedish press. The new party will be politically in the middle of Swedish party politics and headed by the Social Democrat and former chief economist at Nordbanken, Nils Lundgren. Former Swedish national bank governor Lars Wohlin will also be on the list. . . ” - from: http://www.euobserver.com/index.phtml?sid=9&aid=14188

So much for the story that only Conservatives and others on the fringes of politics are sceptical about the Euro.

I won’t even try to parse that one. I say it _is_ the start of an underclass, and you haven’t cited anything from Krugman that says otherwise.

I don’t need to cite Krugman for this (there other economists besides Krugman, you know), I simply need to point out the inherent contradiction in simultaneous maintaining:

1. That french entry-level workers will only bemarginally attached to the labor market over the long term (to wit, an underclass) because older workers aren’t being pushed out to make way for younger workers.

2. that there is a demographic timebomb where the french population is not growing fast enough.

Going on the dole is rational if the dole offers a high replacement rate for lost income, but that’s quite beside the point.

Even a low income replacement rate is advantageous compared to no income.

The “lump of labor” fallacy you buy into implies that the laid-off worker _must_ go on the dole because the amount of work available is fixed. This is simply not the case.

No, I’m saying that laid-off workers will go on the dole, because it makes sense to do so. They may stay on the dole because the amount of work available is *NOT* fixed.

The flaw in your logic is that you assume that it will always grow. Consider the ramifications of the amount of work shrinking. consider the shrinkage of the U.S. labor force over the past three years or so.

I dunno about you, but Ricardo’s iron law of wages comes to my mind.

There may be a gap for individuals, particularly the more out-of-date their skills are, but work and product will both go up eventually. If it’s the gap that troubles you, then the proper solution is (as elucidated by none other than Shrub last night) short-term spending on retraining, which will cost as much as the dole but leave society better-off, net, as the final deployment of labor will be more efficient.

A lot of the “retraining” directed towards the lowest tiers of the labor force is often little more than fool-money-extraction scams.

Anything advocated by Shrub should certainly be considered so until proven otherwise.

“That’s rich coming from a guy pretending that high unemployment among entry-level workers was the start of an ‘underclass’.”

I won’t even try to parse that one. I say it _is_ the start of an underclass, and you haven’t cited anything from Krugman that says otherwise.

“Going on the dole after being laid off is a rational economic action. The labor market is not so friction-free that the laid off are instantly re-employed.”

Going on the dole is rational if the dole offers a high replacement rate for lost income, but that’s quite beside the point. The “lump of labor” fallacy you buy into implies that the laid-off worker _must_ go on the dole because the amount of work available is fixed. This is simply not the case. There may be a gap for individuals, particularly the more out-of-date their skills are, but work and product will both go up eventually. If it’s the gap that troubles you, then the proper solution is (as elucidated by none other than Shrub last night) short-term spending on retraining, which will cost as much as the dole but leave society better-off, net, as the final deployment of labor will be more efficient.

>>Society benefits via the effect on price levels and living standards

a) It implicitly buys into the “lump of labor” fallacy, assuming that the laid-off older worker must of necessity end up on the dole. T’aint so, just ask Paul Krugman.”

That’s rich coming from a guy pretending that high unemployment among entrylevel workers was the start of an ‘underclass’.

Going on the dole after being laid off is a rational economic action. The labor market is not so friction-free that the laid off are instantly re-employed.

[...] This conveniently waves away the effects of competition or the fact that even a monopolist can’t set prices without reference to marginal costs or the demand curve he’s facing. In reality, productivity improvements (which is what getting the same work for 20K less amounts to) will rapidly get passed through to consumers (see Wal-Mart, Carrefour).

On the contrary, a monopolist is perfectly positioned to extract productivity gains of those dependent on the monopoly without affecting the supply/demand curves.

Walmart is a fairly good example of this. How many billions is the walton family fortune again ? How rich are Walmart’s suppliers in comparison ?
How much are Walmart employees paid ?

Society benefits via the effect on price levels and living standards

This is the Bill Gates in the homeless shelter fallacy.

as well as the redeployment of the oldster into some task where he’s worth what he’s getting paid.

This assumes that his previous employer was irrationally paying him more than the old guy was worth. That’s not a shining example of sound economic thinking on your part.

c) It assumes, falsely, that the oldster will automatically be displaced under all circumstances. In reality, the oldster may well be worth a great deal more than the youngster due to his or her accumulated skill-set and experience, and will not be replaced unless the loss in productivity of losing him will be smaller than the improvement in the cost structure.

Ah, you belatedly acknowledge that not all “oldsters” are parasites to be replaced by “gifted” youngsters…

May I suggest that such a calculation (a) involves some intangibles and some unknowns that business executives rarely correctly weigh when comparing against the hard numbers that they do have, and (b) business executives are focused on maximizing profit, and minimizing costs by maximizing third party externalities is more effective in the short term than, say, competition and/or innovation.

To take an obvious counter-example from the trade-sphere, this must be the case or it wouldn’t be _some_ things that are made in Mexico or China, it would be _all_ things.

You may want to (re?)read Krugman on this topic.

“Unless you consider that the 8% gap I’d cited was between France and the U.K. for under -25 year olds…entry-level workers rather than an underclass. The comparison to U.S. black employment irrespective of age/experience is specious.”

On the contrary. Let me crystallize the issue. You brought up the gap between British and French youth in order to make the point that the difference in youth unemployment between inflexible France and flexible Britain is not large. I’m merely pointing out that an 8% gap between two populations (or sub-populations) is not the trifle you seem to think it is. In addition, I’m not buying your implicit claim that Britain sets the standard for labor market flexibility.

“As to the old-fart/young-idiot example:
Let?s put numbers to this hypothetical model:
$45k for the old fart’s household of 4’s income.
Some of which goes through taxes into unemployment for the young guy.

Old guy gets replaced by the young idiot for a $25k salary…who now has to the support the old fart’s household of 4’s through his taxes.”

This portion of your claims, along with what follows it, is chock full of poor economic thinking.

a) It implicitly buys into the “lump of labor” fallacy, assuming that the laid-off older worker must of necessity end up on the dole. T’aint so, just ask Paul Krugman.

b) It assumes that the gains from lowering the cost of production by hiring a guy for 25K instead of 45K will be abrogated entirely by the factory owner. This conveniently waves away the effects of competition or the fact that even a monopolist can’t set prices without reference to marginal costs or the demand curve he’s facing. In reality, productivity improvements (which is what getting the same work for 20K less amounts to) will rapidly get passed through to consumers (see Wal-Mart, Carrefour). Society benefits via the effect on price levels and living standards, as well as the redeployment of the oldster into some task where he’s worth what he’s getting paid.

c) It assumes, falsely, that the oldster will automatically be displaced under all circumstances. In reality, the oldster may well be worth a great deal more than the youngster due to his or her accumulated skill-set and experience, and will not be replaced unless the loss in productivity of losing him will be smaller than the improvement in the cost structure. To take an obvious counter-example from the trade-sphere, this must be the case or it wouldn’t be _some_ things that are made in Mexico or China, it would be _all_ things.

This just scratches the surface, let me know if you want me to continue.

Bernard

Unless you consider that the 8% gap I’d cited was between France and the U.K. for under -25 year olds…entry-level workers rather than an underclass. The comparison to U.S. black employment irrespective of age/experience is specious.

“You seem to think that the only impediment to hiring youth is the minimum wage, but all sorts of other inflexibilities keep labor from shifting from low-value-added to high-value-added functions.”

No, I said that (a) the high French minimum-wage is a major impediment to part-time hiring. (b) part-time hiring lowers unemployment statistics, but doesn’t provide the benefit of full-time unemployment. (c) if you controlled for that, Fr, U.S. and UK unemployment probably aren’t as severely out of alignment as they seem.

As to the old-fart/young-idiot example:
Lets put numbers to this hypothetical model:
$45k for the old fart’s household of 4’s income.
Some of which goes through taxes into unemployment for the young guy.

Old guy gets replaced by the young idiot for a $25k salary…who now has to the support the old fart’s household of 4’s through his taxes.

The employer gains because he’s managed to cut out $20k of expenses. But it’s at the expense of the rest of society (old guy+family+young guy). The employer’s gains may be increased/decreased by how much better or worse the young guy is in comparison to the old guy. The salary differential is a risk premium that the young guy pays in order to be employed. (Assuming, like you did, that the old guy is mediocre and that the young guy is gifted just loads the comparison so that it comes out the way you want it to).

The point isn’t to churn the labor market…but really figuring out what could be done to induce real growth so that both old guy and young guy can be fully employed at the same time without either being forced out.

“You’ve got U.S. unemployment statistics for 18-25 year olds ? Great, post your data!”

Strawman. I said the 8% gap you posted is large compared to the gap exhibited by a known underclass, that is, U.S. blacks vs. U.S. whites. No age stipulation was made as none is necessary, the point being that an 8% gap can loom quite large when you’re on the receiving end. The relevant white and black aggregates are 5.0 and 10.3, BTW.

“My point is that lowering the minimum wage might reduce the unemployment level, but that wouldn’t necessarily get them up to a minimum acceptable rung.”

I thought your point was to try and score a cheap shot using race when you thought I was lilly-white, but ok, I’ll accept the above as a substitute. :^) It still isn’t a good point. Participation in the job-market is, in and of itself, a social good. Those who are shut out for long periods become essentially unemployable, creating both a drag on general standards of living and huge problems for the shut-out group itself. Low incomes can be addressed via transfer payments that phase out as wages increase rather than cut-off cold turkey, and it doesn’t place the burden of misallocated labor on the system as a whole.

“Would you rather they paid unemployment taxes for you, while earning enough to support their family ? Or would you rather that you paid sufficient unemployment taxes to support them and their family ?”

I’d much rather we both work and pay, obviously. But all things considered, I imagine that the average 25-year-old would rather have the job. More importantly, a society interested in the rational deployment of assets would rather that the combination of labor producing the highest value-added be working, even if that means the oldster’s the one who goes on the dole.

“Keep in mind that you’re not going to get their wages because you’ve got no experience, work-knowledge and you haven’t yet proven your ‘giftedness’ in the workplace.”

Depends entirely on the position the oldster and the youngster fill respectively. You seem to think that the only impediment to hiring youth is the minimum wage, but all sorts of other inflexibilities keep labor from shifting from low-value-added to high-value-added functions.

“Again, keep in mind that you too will someday be an old fart that management would love to replace with a cheaper idiot willing to work long hours for a pittance.”

And if they can get equal value-added from the young idiot, they’d be right to want to do so. And society would be right to want to see it happen. Which is why the bright boys stay in school. :^)

Bernard, 33 and a (part-time) student for life…

You’ve got U.S. unemployment statistics for 18-25 year olds ? Great, post your data!

…Because the closest thing I found: http://stats.bls.gov/news.release/empsit.t02.htm
only broke out 16-19 year olds…

Where the recent unemployment for whites and blacks was around 14.5% and 32%, respectively.

Quite beside the point. If Europe _doesn’t_ already have such an underclass, I can’t see much point in creating one from scratch.

My argument was that the U.S., Britain, and France all have large immmigrant populations at the bottom of the economic ladder, despite the structural wage/unemployment-level differences. My point is that lowering the minimum wage might reduce the unemployment level, but that wouldn’t necessarily get them up to a minimum acceptable rung.

“riiiight, take away the jobs of those who have dependents, and give them to those who have none.”

So you owe them because they have dependents? So a bright, hard-working kid just out school owes them because they got to procreate first?

Would you rather they paid unemployment taxes for you, while earning enough to support their family ?
Or would you rather that you paid sufficient unemployment taxes to support them and their family ?

Keep in mind that you’re not going to get their wages because you’ve got no experience, work-knowledge and you haven’t yet proven your ‘giftedness’ in the workplace.

I think the former is actually the more efficient division of labor. Again, keep in mind that you too will someday be an old fart that management would love to replace with a cheaper idiot willing to work long hours for a pittance.