More options Aug 21, 11:46 am

From: Biff <jacobsenj...@sbcglobal.net>
Date: Fri, 21 Aug 2009 09:46:40 -0700 (PDT)
Local: Fri, Aug 21 2009 11:46 am

".....This month my CEPR (Center for Economic and Policy Research)
colleagues John Schmitt and Nathan Lane showed that the United States
is not the nation of small businesses that it is regularly dressed up
to be for electoral campaign speeches and editorials. If we look at
what percentage of our overall labour force is self-employed, or what
percentage of manufacturing workers or high-tech workers are employed
in small businesses – well, the US ranks at or near the bottom among
high-income countries.

    As economist Paul Krugman noted after reading the study: "One
more
American myth bites the dust." Indeed it has. And as both the authors
of the paper and Krugman note, there is a plausible explanation for
the US's low score in the small business contest: our lack of
national
health insurance. There are enough risks associated with choosing to
start a business over being an employee, but the Europeans don't have
to worry that they will go bankrupt for lack of health insurance.

    A number of other alleged advantages of America's "economic
dynamism" are also mythical. Most people think that there is more
economic mobility in America than in Europe. Guess again. We're also
near the bottom of rich countries in this category, for example as
measured by the percentage of low-income households that escape from
this status each year.

    The idea that the US is more "internationally competitive" has
been without economic foundation for decades, as measured by the most
obvious indicator: our trade deficit, which peaked at 6% of GDP in
2006. (It has fallen sharply from its peak during this recession but
will rebound strongly when the economy recovers).

    And of course the idea that our less regulated, more "market-
friendly" financial system was more innovative and efficient – widely
held by our leading experts and policy-makers such as Alan Greenspan,
until recently – collapsed along with our $8tn housing bubble.

    On the other hand, most Americans pay a high price for the
institutional arrangements that bring us these mythical successes. We
have the dubious honour of being the only "no-vacation nation", ie no
legally required paid time off and of course some weeks fewer actual
days off per year than our European counterparts enjoy. We have a
broken healthcare system that costs about twice as much per capita as
that of our peer nations and delivers worse outcomes, as measured by
life expectancy and infant mortality. We are near the top in terms of
inequality among high-income countries and at the bottom for parental
leave policies and paid sick days. The list is a long one.

    Yet it was just two years ago that Nicholas Sarkozy successfully
won the presidency of France by arguing that the French could not
afford their welfare state and had to adopt a series of reforms that
would make the French economy more "dynamic" like that of the US.
These included tax cuts for the rich and labour law changes that
would
make it easier for employers to fire people.

    Many French are now sorry they voted for this guy and very glad
that they have more protection than most Americans have from the
ravages of the recession. Of course they could also use a larger
economic stimulus, but the fact that they don't have one is due to
the
neoliberal policies of their own government and those of the European
Union, especially the European Central Bank.

   There is another area where the comparison between the American
and
European model has serious implications for the future of the planet:
climate change. "Old Europe" uses about half as much energy per
capita
as the US does. A big part of this difference is because Europeans,
in
recent decades, have taken much more of their productivity gains in
the form of increased leisure time, rather than working the same (or
longer) hours in order to consume more.

    We estimated that the US would consume about 20% less energy if
it
had the work hours of the EU-15. This would have a significant impact
on world carbon emissions. Furthermore, when the world economy
recovers, there are a number of middle-income countries that will
approach high-income status in the not-too-distant future (South
Korea
and Taiwan are already there). Whether they choose the American or
the
European model will have an even bigger impact on global climate
change.

    The major media in both Europe and the United States have played
an important role, for decades, in helping politicians capitalise on
economic mythology to push policy in economic and socially
destructive
directions on both sides of the Atlantic. It remains to be seen how
much the Great Recession will influence the thinking and reporting of
these influential institutions."