European economy lags rest of world

[lovuian]

http://feeds.bignewsnetwork.com/?sid=ff11106532ab512d

European economy lags rest of world
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By Donna Borak Friday 11th February, 2005 (UPI)

In a 15-minute speech to foreign ambassadors, financial experts and business men and women, newly elected European Parliament Vice President Alejo Vidal-Quadras Roca tried to answer the question on the minds of 450 million European Union citizens: 'Why is the European economy not growing?'

Speaking in plain language, Roca, who spoke Thursday at the University Club in Washington, D.C., painted a bleak picture of the region's economy, quoting 19 statistical data figures that all said the same thing: Europe lacks growth.

Compared to other countries like the United States and Japan it is a fact that Europe's productivity and growth rate has fallen well behind its main partners. In 2004, the average growth of the euro area was only 2.2 percent, lagging behind economies like the United States, which grew by 4 percent and Japan, which grew by 4.4 percent.

more...

Well an incredibly high Euro is to blame and a unreasonably low dollar is one of the big reasons ...But at least they are fiscally responsible!!!

[Massacure]

1. What is wrong with 2 percent growth?

[punpirate]

7. Exactly so....

Much of Western Europe is soon to have a negative population growth--they've had to raise immigration levels to keep the workforce constant.

If their economy is growing at all under those conditions, it's an indication that it's not all that unhealthy. Moreover, some have postulated (most recently T.R. Reid of the WaPo) that Europeans settle for less growth in exchange for a better quality of life and good working conditions.

At minimum, the growth rate needs only accommodate the number of new workers entering the workforce and the rate of inflation. Beyond that, it's just gravy for the investors. A company paying the same amount per share (for a static number of shares), year after year, has, technically, zero growth, but it's still profitable.

[Massacure]

9. If their unemployment is 10%, isnt population decline a good thing?

[punpirate]

13. Yes and no....

The problem is that Western Europe's workforce is aging, just like ours, and as those people leave skilled jobs, particularly in manufacturing, they need replacements if they want to keep up some semblance of productivity.

As for 10% unemployment, I don't think this is the case all over the EU, but it is in Germany. Part of that figure in Germany is due to better unemployment comp, so people tend to stay out of the workforce longer, until equivalent employment comes along. Another part of it is the absorption of East Germany--unemployment is still rather high in the formerly Communist eastern sector. And in selected areas of industry, there are surpluses and it's tough to find a job--not much different there than here for IT people, etc.

Cheers.

[Sub Atomic]

15. In all respect

remember, if you look at the total unemployed here in America, you'll also be looking at near or above the same percentage.

it's all about the point of view and the honesty of the reporting.

[eridani]

18. Don't forget about the prison-industrial complex

2/3 of the jailed and jailers are effectively unemployed.

[Radio_free_america]

25. Arf do you think economic groth is so much important ?

It does matter to ecomonist, but for cytizens ?

[Igel]

38. Yes; it's important.

No growth, no reduction in employment or increases in benefits or wages. You're looking at stasis, and there's always room for growth unless you're at 2% employment and everybody's making enough money to have a good, if not very good, standard standard of living.

And even 2% is probably a reduction in output, unless it's adjusted for inflation.

[Radio_free_america]

57. Absolutly false, Full-Liberal economy is an aberation

URSS achieve full employement during many years, and go to space before USA.
Their economie falled because of constant state of war, and dictatorial politicians.

Is communism tied to dictatorial gvt ? It's an other question.
URSS proved that employement is not tied to liberal's economic's standards.

Other way are possibles.

Do ou realise that never in history an Nation had so wealth ?
Even pharaon is a dwarf in front of Bill Gates's wealth.

What could we do for all of us with that ? Is a good question.

Economics groth is not important for a standard citizen. Inflation, inequity in it's distibution eat each part of economic "groth".

Economic groth in a closed space like earth is even a danger for us all.
Geological resources depleted...
Climate change...
Total war with nukes...

Full-Liberal economy is no a solution to this.

We humans, must find something else.

[lovuian]

2. Their Workers are lazy cause they don't have to carry 3 jobs

to make a living!!!

[BoogDoc7]

3. 2%?

2% is VERY poor growth. Any company that barely keeps ahead of cost-of-living isn't doing what needs to be done.

Frankly, I think that Old Europe just doesn't have anywhere - and very little knowledge - on how to grow and invest. Eastern Europe and Africa are the next boomers, and Russia if it can get off its rear end and install a real capitalistic system rather than the semi-central controlled corporations in the hands of too few men....sorta like Japan, just without the money.

[Maple]

6. I really think

we've heard this sort of bull many times over the years, as Bushites try to insist that Europe is a bad place doomed to fail.

Oddly enough Europe just keeps on going, as does their Euro.

Considering how many countries are joining, the growth rate is excellent. That's a lot to absorb and adapt to.

There's a waiting list btw.

[jdj]

11. repukes are scared shitless of "old europe"

because the EU has the potential to make assholes out of us. If you look at them as a single unit they are doing better than us in every way, the only exception being they don't have a military.

[Maple]

14. Well they certainly trash it

every chance they get ! They wouldn't do that if they didn't see it as a rival. They'd either be friendly, or just ignore it.

The EU is also putting together a joint military force I believe.

[cvoogt]

29. huh?

they do have a military and are increasingly developing technology and strategeries independently of the US....

[punpirate]

8. I think Paul Krugman wrote recently...

... that long-term growth in the US averaged 1.8%....

[Barkley]

24. You're right punpirate!

In Krugman's Book "Peddling Prosperity" (1994) he warns about comparing short-term growth rates since they are strongly influenced by the business cycle(pp. 112-115).

The U.S. and Japan are emerging from recessions so growth rates will be high.

[TahitiNut]

31. I'd like to see per-capita growth rate rather than gross growth rate.

Just as some might believe that Bovine Growth Hormone has led to the 'growth rate' of humans in our society, I think a (figurative) Porcine Growth Hormone is leading to the Oncological traits in our economy.

[punpirate]

41. Krugman has stated...

... in one of his columns on Social Security that over the very long term, the effective growth rate (looking at the GDP in constant dollars) is fairly close to the increase in the size of the labor force, which is a function of population growth. Therefore, growth is mostly a function of population increase. (This alone might explain the far right's attraction to fundie family values embracing a disdain for all manner of contraception and clearly ineffective "abstinence training.")

Cheers.

[idlisambar]

17. you must have missed this

"I think that Old Europe just doesn't have anywhere - and very little knowledge - on how to grow and invest."

Then explain this latest example of "Old Europe" bumbling its way to leadership in an industry once dominated by the U.S.....

http://www.news.com.au/common/imagedata/0,3600,410962,00.jpg

http://www.heraldsun.news.com.au/common/story_page/0,5478,11985921%255E401,00.html

[BoogDoc7]

39. Which I was...

I knew about this, and was thinking at the time...well, looks like they did something RIGHT for once.

ONCE. I'm not going to judge the future of the entirety of Europe simply because they can make a bigger plane that can't land on a bunch of major airfields. Their economy is still going to become a backwater and will continually lag in growth.

By the way, I'd like to see how much this was government subsidized rather than private investment.

[idlisambar]

43. It's not just about one plane

This plane is just the latest blow. The U.S. civilian aerospace industry was unchallenged 20 years ago but now it is on the verge of collapse. For one, Boeing lost leadership to Airbus in aircraft sales a couple of years ago. Second, Boeing itself is just a hollow hulk as it now offshores most of its manufacturing, and as a consequence net exports in the sector have dwindled.

Of course aerospace is just one industry sector, but as the strength of the Euro indicates it may just be a particularly good example of a more general trend -- Europe's relative position vis-a-vis the U.S. in tradable goods has only gotten stronger.

As for government subsidies, there is no question they have helped Airbus achieve such a promising position, but surely the prize of aerospace industry dominance is worth a little public investment.

[TahitiNut]

30. It's only a poor growth rate for a cancer.

:eyes: In all other cases, it completely depends on context and an absolutist stance on such numbers is simplistic horseshit.

[amazona]

58. guessing this person hasn't been to Africa OR Europe

I've visited both. Africa is not "booming," it is heart-breaking. I now understand the phrase "Fourth World." Meanwhile the Europeans are much richer than the average American, at least that is the way it seems when you try to buy anything. They must be well compensated indeed to pay those prices, and they get 6 week vacations and free health care too?

When you're already at the top, it's hard to get better than the best. If more Americans had any vacation time and took a look at Europe for themselves, they'd be shocked at how much better they have it over there in a lot of ways.


If Old Europe doesn't know how to "grow and invest," how come they have all the banks with all the MONEY????

The conservation movement is a breeding ground of communists
and other subversives. We intend to clean them out,
even if it means rounding up every birdwatcher in the country.
--John Mitchell, US Attorney General 1969-72

[VegasWolf]

45. Didn't you listen to the pretzeldent? 3 jobs is uniquely murikkan.n/t

[Nite Owl]

4. I also think that the

way that they do their numbers is more honest. If our inflation rate were to include things that really matter, are truly inflationary. like the rise in health care costs, then our growth rate would not be as high at all. They also figure their unemployment numbers more honestly. We just stop including people who have stopped looking for work and if we did our numbers would be about the same as theirs.

[KissMeKate]

5. quality of life is better

life isnt so desperate in europe.

[Dirk39]

10. But despite the high Euro,

Hello from Germany!
despite the high Euro, Germany has become the export-nation Nr. 1 worldwide! At the same time, Germany's growth-rate is well under 2%.

The profit-margins of "german" corporations are at an all time high.
At the same time, we have the highest-unemployment-rate since Weimar before Hitler: more than 5 million Germans are without a job. Some economists speak of more than 8 million people not finding a job, who would like to work (Germany has about 80 million inhabitants).

On the other hand, it's getting pervert. Americans are told, the biggest problem is the trade deficit, so workers shouldn't ask for better conditions or higher wages. At the same time, the country that doesn't have any kind of "trade deficit" at all, but is exporting more gods than any other country, is undergoing the same kind of crisis.

Wherever you are, whatever the growth-rate might be, whatever the trade-deficit might be: since Reagan and Thatcher there's always everywhere a crisis, justifying to worsen labour-conditions, to cut social-security, to extend working-hours...
And there's only one solution: no matter if it's France or Great Britain or the USA or Germany or Italy: Privatise everything, deconstruct Social Security, lower the tax for corporations, free the corporations from any law, that might protect the employees.
And their profit-margins - no matter where - are rising and rising and rising - but just not enough.
We have bad doctors, selling us poison as medicine.

And whatever might happen: they will tell us that we just need more of the neoliberal medicine.

Dirk

[jdj]

12. thank you Dirk

I wish we could nominate posts for the greatest page.

There really is a war going on between the worker and the corporateers.

They are truly fucked is all of us workers realize this at about the same moment, we'll open a world wide can of ass-whoopin, and storm their Bastille like it's never been stormed before.

[idlisambar]

20. Hi Dirk39

The German situation is interesting to me. What can you say about the differences in the growth and employment indicators between the former West Germany and East Germany? From what I have read economic troubles (employment, etc.) are much worse in the East German section.

[Dirk39]

21. Hello Idlisambar!

The situation is far worse in East-Germany. But it would be really a scientific issue to study the reasons, starting with the way the german "re-unification" did happen.

To be a bit less scientific but not too far from the truth:
West-German workers had to pay for everything and had to finance East-German Social-Security-Systems and East-German pensions.
West-German corporations did "earn" or "steal" all the money.
Now the workers in the East and the West are told that the times of Social-Security, Pensions and health-care are over....

It's still somehow funny to study Germany: You're looking for cheap labour? You're looking for people, accepting any kind of job?
What about East-Germany!

No, no, no.
But if West-German workers would accept less money, more working-hours, less social-security - we would reach Paradise pretty soon.

Capitalism has become so stalinist these days....

Just combine the worst of capitalism and the worst of stalinism and you're not too far from the neoliberal paradise we live in...

Dirk

[VegasWolf]

46. Hi Dirk, your post reminds me of what a good friend, a Russian

mathematician from St. Petersburg once said, and that
is there is only one definition of government, in the end
it is hand me your money.

[jakpalmer]

55. Excellent post Dirk !

I completely agree with you.

[idlisambar]

16. The most plausible explanation: U.S. growth statistics are exaggerated

The methodology behind the calculation of GDP and productivity statistics is not standard across nations. Much (if not all) of the difference between the U.S. and the major nations of Europe is probably accounted for by the differences in methodology (along with demographic factors).

The U.S. is particularly "aggressive" in its calculation of inflation, discounting many price increases through "quality adjustment" techniques. I have seen many estimates for how much inflation is understated vs. the previous calculation methods, but even a BLS economists acknowledge a difference of about 0.5%.

For more on this...

http://www.euractiv.com/Article?tcmuri=tcm:29-110252-16&type=Analysis
http://www.gillespieresearch.com/cgi-bin/bgn/article/id=344
http://seattlepi.nwsource.com/business/207970_cpi17xx.html

Also, here is an interesting site providing insight and explanations of multiple statistics of interest (employment, GDP, federal budget, etc.)...

http://www.gillespieresearch.com/cgi-bin/bgn/

[eridani]

19. Sweden is at 4%

http://news.independent.co.uk/europe/story.jsp?story=607939

Sweden, the country with the highest taxes in Europe, is planning to increase them further to boost public services already envied by most of its neighbours. In a forthright challenge to the low tax orthodoxy of Britain's centre-left, Swedish politicians say their voters will stump up more money because they get value for money from their welfare state.

The move also underlines the success of the so-called "Nordic model" under which countries following Sweden have forged competitive economies with high levels of taxation and public spending. Although Swedes face some of the highest tax bills in the world, they enjoy free, high-quality school and university education, generous unemployment benefits, state-funded maternity and paternity leave and guaranteed child care.

And the "Nordic model", with its investment in hi-tech science, has delivered economically. Sweden's economy grew at almost 4 per cent last year with a 3 per cent increase predicted for 2005. This has been achieved with the highest rate of investment in research and development of any European country, 4.3 per cent of gross domestic product compared to 1.9 per cent in the UK in 2003.

[Dirk39]

22. Could you please do me a favour...

and stop to tell the truth and other left-wing propaganda!
This simply must be a lie!

Please tell me that Sweden is about to collapse!
Please tell me so!
I want to privatize you to paradise!

Hello from Germany,
Dirk

[UL_Approved]

23. This looks like propaganda

Look at this DU link:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1231758

This site appears to be a spin site with pro-military, RW slant.

Several people here have been watching it, including me.

I wonder if it is the next Talon News. Some sleuth blogging is required in my opinion. Any takers?

[kohlehydrat]

26. hello everyone,

firsttime poster, been reading here since november.

sorry if this has been mentioned before...
speaking from over here in good old europe (austria specifically) i must admit that i don't know exactly what goes into factoring economic growth from the numbers side. what i *do* know is that despite many problems and much griping, we have excellent health care and social security and the overall quality of life on almost all levels and by any definition is extremely high. that costs money, investments. i suppose that meters in so that growth is not as high as in other regions. i am convinced though that in the long run it pays off. and if it doesn't, well in the meantime a larger percentage of people are happier and more content than in regions where the rich get richer and the poor get poorer.

[area51]

36. Welcome.

Welcome to DU, kohlehydrat.

---

"Prosperity is just around the corner." -- Herbert Hoover
"The economy has turned a corner." -- GW Bush

Herbert Hoover = GW Bush

Neither man cared about the Depression their economic policies created.

[DemExpat]

37. Yes, welcome, kohlehydrat.

I agree....

from The Netherlands.

:hi:

DemEx

[VegasWolf]

47. You devil, Amsterdam? n/t

[applegrove]

27. Most of Europe didn't go to war. Most of the USA did.

[Redstone]

28. Maybe because Europeans know

that there's more to life than work, work, work, grow, grow, grow, gotta get those numbers up...they take the time to enjoy life and have a vacation once in a while, unlike us Americans.

Redstone

[applegrove]

35. Yes - their values will change as their economy doesn't heat up.

No wonder they want to get rid of NATO!!

[Lydia Leftcoast]

32. Not familiar with current conditions in Europe, but Japan,

despite its supposed 4% growth rate, is undergoing a lot of social dislocation.

Their old system (as I saw it in the 1970s) kept prices high, but it's important to note that these prices were NOT too high for people to maintain a comfortable life. Sure, they didn't have McMansions and SUVs, but the only street people you saw were obvious late-stage alcoholics (as was the case in the U.S. before the Reagan era), and people ate and dressed well and had small but adequate houses with most modern conveniences (except central heating, although newer houses have it). They had full employment, so much so that stores and the like seemed overstaffed. But full employment meant that everyone had a stake in the society.

Their business executives mostly had no degrees in business but had started working their way through the ranks after a five-year training period in which they spent time assigned to all the departments of their company until the higher-ups determined which department they were best suited for.

Crime was about as low as you can expect in a major world capital. The economic backbone of the country was millions of small businesses, including whole urban villages of mom and pop stores.

I don't think it's a coincidence that Japan's economic decline began under U.S. pressure, first to follow "international" (i.e. U.S.) corporate practices, then to send Japanese business people to the U.S. for MBA training, then to revise their zoning laws to allow big box retailers. It didn't help that the yen rose to unsustainable levels--90 to the U.S. dollar, which made Japanese exports prohibitively expensive in North America.

Sure, the failure of the banks didn't help, but it was NOT the entire reason behind Japan's prolonged recession. (The banks' problems were caused by the collapse of a real estate bubble and corrupt government inspectors who took indirect bribes to ignore the fact that banks were trying to hide their non-performing loans by keeping two sets of books. If they had blown their whistles earlier, the banks probably would have had to fess up and do something about their bad loans before they reached impossible levels.)

Anyway, I didn't visit Japan between 1991 and 2000, during which time, the news was full of reports of record unemployment. Here's what I found when I went back:

> Amazing numbers of street people living along the riverbanks in makeshift plastic-covered shanties in both Tokyo and Osaka
> Long-term unemployment, especially among middle-aged business people. There was a period when Japan had a higher unemployment rate than the U.S.--this in a country where 2% unemployment was the norm for decades.
> Record business failures
> Shady finance companies having a field day charging high interest rates in a country where it's almost impossible to declare personal bankruptcy
> Lots of shuttered small businesses
> More chain stores, including foreign-owned ones
> So-called "100-yen shops" filled with cheap Chinese and SE Asian imports
> Twentysomethings and thirtysomethings unable to find a place in society and drifting from one part-time job to another. Commentators worry that they will not be able to amass the savings that their steadily employed parents did.
> Higher crime rates and increases in family violence (People always tended to ignore spousal and child abuse, but it's getting harder to ignore as young people from dysfunctional families act out in horrifying ways.)

A certain recovery is underway, but I'd like to remind everyone that countries coming out of the economic dumps have high growth rates, because, for example, if Country A's GDP is at 100 and grows by 2, that's 2% growth, but if Country B is at 50 and grows by 2, that's 4% growth.

I still love Japan, but if it indeed has a 4% growth rate, the growth is extremely uneven.

I would not be surprised if the imposition of American business practices and the high yen were deliberate tactics to cripple a formidable economic rival.

I hope Europe sticks to its own traditions and resists pressure to "Americanize."

[Art_from_Ark]

33. The high yen was a deliberate tactic

First came the "Nixon shock" of 1971 when the value of the yen was suddenly removed from its peg of 360/dollar and revalued at 260/dollar.

Then came the "Reagan shock" where the yen was suddenly pushed from its "free market" rate of 260/dollar up to 160/dollar in the course of a couple of months in 1985. That was followed by Reagan "persuading" Japanese exporters to "voluntarily" curtail their exports to the US. At the same time, Japan was pressured to move a lot of its production facilities to the US. Then bu$h 1 dragged along some of his auto industry boys in a doomed attempt to force Japan to buy junky cars that were not made for the different conditions of the Japanese roads (like right-side steering).

Then there was the yo-yoing exchange rates of the 1990s which I don't believe was part of government policy-- it was more like currency traders realizing they could manipulate the yen because Western investors had no idea what the Japanese economy was actually doing. Wheher by government design or market manipulation, however, the effect was still the same-- a lot of Japanese businesses had to become leaner and meaner just because of crazy exchange rates.

[idlisambar]

49. Concerning the street people

I heard that that there were always homeless in Tokyo, but before the early 90's they were confined mostly in designated slum districts.

[Lydia Leftcoast]

50. They were confined to a district called San'ya

and to the underground arcades in the major subway stations.

Now they're in shanty towns along the riverbanks and in the parks, in addition to these traditional locations.

[leesa]

34. Is THAT why Russia is pegging it's ruble to the EU and China intends

to do the same?? This sounds like BS.

[VegasWolf]

48. No, it really is true that the EU economy is struggling. The euro

is doing so well mainly because the world has lost confidence in
the USD. If a nitwit like bush can be re-elected here then
would you park your money here? The world sees what the
massive US deficit will do to the US economy even if
the deep thinkers that choose bush don't.

[Joe Chi Minh]

40. So WHAT!

A civilised human society doesn't need a helter-skelter pursuit of ever greater profits. It's the slaves of an open-ended greed, the sociopaths who run the economic affairs of most countries, who feel they do.

[llmart]

42. Agreed......

and I think that many, many Americans actually envy the European lifestyle (well, at least the ones who are intellectually curious enough to actually learn and read about it) but don't have the nerve to change their own lifestyles to emulate it. Trends and societal shifts can happen at the grassroots level and usually do. There are many Americans out there that are called "cultural creatives" (read the book on it) and practice voluntary simplicity so that they can have the free time to actually enjoy life instead of being ever in pursuit of the next "thing" or doodad.

[amazona]

61. and Americans who do try to pursue voluntary simplicity are often sorry

The big sticking point is health care. I know too many people who voluntarily down-sized/simplified their lives to seek their "bliss" and were destroyed by illness and lack of access to health care. In my state, private health insurance is scarily expensive and really not available to people in such broad categories as smokers, overweight, any pre-existing conditions, etc.

I now strongly advise people thinking of retiring earlier or quitting their jobs to pursue something creative... I very strongly advise them...Don't Do It. Because when you are sick or injured you lose everything. Americans have to stay in the rat race because, for most of them, it is the only way to get health care until they are old enough for Medicare.

The conservation movement is a breeding ground of communists
and other subversives. We intend to clean them out,
even if it means rounding up every birdwatcher in the country.
--John Mitchell, US Attorney General 1969-72

[98geoduck]

44. Maybe they need to create a multi trillion dollar debt for their youth.

[stepnw1f]

51. This Is Propaganda

Sorry but our economy is not OUR economy. It's exclussive and does not benefit the average American. This is utter garbage and an obvious attempt to spread misinformation.

[Joe Chi Minh]

52. In a nutshell, stepnw1f.

And our lot in the UK have the gall to boast that the *country* has never been richer!!! Even as they've felt compelled to plunder pension funds.

[stepnw1f]

54. Thank You , KCabotDullesMarxIII

How's the weather there?

[Joe Chi Minh]

56. Cold again, today, stepnw1f,

but not bitter - just bracing, and beautiful sunshine! You should get on very well with my wife's family.

When speaking to each other on the phone, they always ask about the weather, and my late father-in-law also liked to know where he stood in relation to the points of the compass (I bought my wife a key-ring with a compass atached!). Also, which way the wind was blowing. When we went out, one day, I was astonished to see him holding his finger up in the air (presumably having licked it), to feel which way it was blowing!

What about your neck of the woods? How's the weather down your way?

[stepnw1f]

62. Cold But Not Bitter

Overcast.... but relatively optimistic about tomorrow.

[Joe Chi Minh]

63. Nice one!

"Overcast.... but relatively optimistic about tomorrow."
You've got those weather people down to a tee, Steps.

[applegrove]

53. Europeans have been at the end of an Empire before. Many times actually ..

They instinctively know that there is no point in getting all delusional and drunk on your own importance. You have to face the music and adapt to the Emerging Empires. Something America could learn from.

[MisterP]

59. is this related to Goss's purged CIA saying there's no way Europe

can survive without taking the Pinochet-Thatcher-Reagan track?

[mmonk]

60. So?

The US lags in the growth and development of a society.