Hard times hit the European middle class. The New York Times describes the slow descent from giving up luxury vacations to wearing second-hand clothes forced on salaried workers by a relentless rise in prices combined with a stagnant income in Europe. The good times are gone. The $64,000 question is whether they will ever come back.
In Germany, Europe’s largest economy, the decline in purchasing power began in 2000, when employers started wresting wage concessions from unions, or simply shifting jobs to Eastern Europe and China.
Inflation-adjusted incomes rose from 1 percent to 2 percent in the late 1990s, but more than one million Germans lost full-time jobs during and after a recession in 2000 and 2001. Subsequently, workweeks got longer without extra pay, and from 2004 through 2007, inflation outpaced income increases for the average family.
For decades the country in which a worker was a good predictor of what he would earn. A job in the US or Europe would pay a real wage that was many times higher than a similar job in Africa. That was because there was a rough correspondence between the productivity of a Westerner over an African or Indian. There was an actual economic basis for the disparity. Today the gap in productivity is not nearly so great as it used to be. And the difference in real incomes has for some professions narrowed significantly. This would be cause for social activists all over the world to celebrate. Except that for most social activists in Europe at least, real incomes are threatening to fall with no floor in sight. The NYT article continues:
That simmering concern turned into anger last week in Britain. Striking teachers closed schools for the first time in two decades, protesting pay packages that did not keep pace with the soaring cost of living. Proposed raises were about 2.5 percent, while food has risen 7 percent and oil costs have surged 20 percent in Britain since this time last year. ...
German leaders are considering lower taxes. It may not be enough.
Frustrated unions are taking tougher stances in wage talks. Public sector employees, as well as workers in the steel and chemical industries, have recently won wage increases.
“The idea that ‘I will sacrifice to save my job’ is dying,” said Ralf Berchthold, a spokesman with Ver.di, the largest services union in Germany. “People are ready to fight now.”
Actually, lowering taxes might help more than the NYT will admit. And so will a reduction in regulation. And anything else that will help innovation. Knowledge will be the key fuel of economic growth in the coming decades. And Western schools which produce illiterate graduates while fostering in their products the expectation they will be employed as handsomely as their parents will churn out a bitter crop. Ironically the threat by public school teachers may actually help; if it leads to the demise of sham schools and incompetent teachers. In an increasingly globalized economy, only increasing productivity can create rising incomes. Geography's influence on income is coming to an end.
Freedom from mediocrity or penury. The stars or the mire. That's the challenge before the Western world.
The Left contributed almost nothing to the productive superiority of the 20th century Western world. What they succeeded in doing was winning for themselves the right to distribute the fruits of this competitive advantage. They even went so far as to distribute that largesse to millions of undocumented immigrants and in lavish aid packages where they employed themselves, naturally.
Michelle Obama, in an interview, revealed the core of the problem when she described educational investments that did not produce a return in pure economic terms. Some activities are viable only when transfer payments are available to support them. When there is less income to transfer, there is unremitting pressure to cut back on activities like gender studies and campaigns for the preservation of endangered newts. Mark Steyn plays the funny man to Hugh Hewitt's straight man listening to Michelle's words.
MO: Like many young people coming out of college, with their MA’s and BA’s and PhD’s and MPh’s coming out so mired in debt that they have to forego the careers of their dreams, see, because when you’re mired in debt, you can’t afford to be a teacher or a nurse or social worker, or a pastor of a Church, or to run a small non-profit organization, or to do research for a small community group, or to be a community organizer...
MO: ... because the salaries that you’ll earn in those jobs won’t cover the cost of the degree that it took to get the job.
HH: We’ve got to stop, because I heard you laughing, Mark Steyn.
MS: (laughing) I know. I have never heard anything…I mean, if the premise is that too many people in America go to college and saddle themselves with gazillions of dollars in debt for no good reason, I would agree with that. But the idea that oh, my God, you know, I wanted to run this small non-profit, but I made the mistake of going to Harvard and Princeton, and I got hundreds of thousands of dollars in debt, so I had to become a big corporate CEO, I had to found a multi-national company when all I really wanted to do was just be a nice, little grade school teacher, this is ridiculous.
Now that the productivity advantage is eroding the pickings are getting slimmer. And since the only thing the Left knows how to do is squeeze harder and harder the really interesting question is whether future economic survival will require a diminution of the "progressive" forces for any real progress to actually take place; or whether it will prove true that the future isn't big enough to hold both the Left and a loaf of bread.
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