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April 01, 2006

Comments

This DailyKos diary may be of interest.

Sebastian, have you been following the debates at A Fistful of Euros? There's a great deal of back-n'-forthing between informed commenters in their France threads.

I'd also suggest that the demonstrations, occupations, and riots shouldn't simply be chalked up to the firing law. Sure, that's the spark, but there's a lot for a young French person to be frustrated about these days, from the confined political discourse (de Villepin or Sarkoszy? are there no other choices?) to the prospectless public university system...

Can anyone explain to me how making it easier to fire someone, without an explanation, will lead to more employment?

Thanks spartikus for the link.

We are having similar problems in Aus. Our current govt. has just brought in new industrial relations (IR) laws, Monday 27/3. It is basically a union bashing exercise. They spent approx 50million dollars advertising the changes, called 'work choices'. except that workers have no choices. we used to have unfair dismissal laws, now you can be sacked without reason and no recourse. this past week has seen many cases of people sacked, then offered their jobs back at much lower wages. Things such as: shift penalties, overtime, meal breaks are out. collective bargaining is history, unions have to get permission to visit and all union votes must now be done by the electoral commission. The 'choice' workers have is to say yes to what the boss wants or forget it. Using the excuse that we have to be more competitive in world global market.

It appears to me that instead of wanting to improve the lot of workers in developing countries, they(the corproations & therefore govts) actually want to lower the standard of living for the middle class in developed nations, as an excuse to make more money. Record profits all over the place just isn't enough anymore. And worst of all we listen to the bs and take it as gospel.

Sorry to rave on. But I would hope that you dont judge the French to badly. they at least have the courage to demonstrate for their convictions.

Perhaps I am misunderstanding the last paragraph, so apologies if this is a threadjack, but it seems to me that the fact that the 'right' (I'm just using your framing here) sees this as something that provides an obvious and unitary explanation and the 'left' doesn't/can't settle on one story suggests that reductionism is one of the problems here. To draw a parallel to the US, if one thinks that the recent immigration debate as being solely related to the question of immigration rather than to a whole host of social factors, one would be falling into the same trap.

From jm's recommended fistful of euros site, this article by Wolfgang Munchau.

The students are winning the political battle against Dominique de Villepin, the French Prime Minister, over his labour contract for young people, known as CPE. At first sight, the travails of Mr de Villepin fit a depressing pattern of Europe’s chronic inability to reform. The Prime Minister is portrayed in the media as an idealistic political leader who tried to do the right thing, but failed. In the same vein, the young protesters on the streets of Paris look as though they stand in the way of France’s transition to the 21st century.

This narrative is as widespread as it is false. As far as I know there exists no reputable academic foundation for Mr de Villepin’s specific proposal—a work contract that removes employment protection for the young, while leaving it fully in place for the old. There is some consensus in the labour market literature that excessive employment protection can lead to high unemployment among certain groups, including the young. But this consensus does not imply the selective removal of employment protection for a single age group. I would suspect that most labour market economists would be on the side of the students in this conflict.

the AFOE link gives a countering piece.

Ironically, I think Japan has a similar problem as France, but is able to finesse it better for two reasons. The first is that while France, both because of its history and its integration into the EU, cannot utilize the differences in citizenship to make a two tier system as Japan can. The second is that the uchi/soto distinction goes a long way to preventing 'working to rule', which, if my French friends were any example, was rampant.

Can anyone explain to me how making it easier to fire someone, without an explanation, will lead to more employment?

Here's the simplest example: In a world where all workers can be readily hired and fired at will, corporations can safely hire in response to a spike in demand, confident that if the business cycle goes in the other direction, they won't be stuck with all those unneeded workers.

On the other hand, if once you buy a worker he's yours to keep, then you are going to be more reluctant to expand your business, because you're stuck with the expansion whether it works out or not. As Sebastian says, if you're not allowed to adjust your workforce as the need arises, it creates an inefficiency.

Can anyone explain to me how making it easier to fire someone, without an explanation, will lead to more employment?

less job security = more motivated workers = higer productivity = more profit = more money for more employees . ?

hopefully there's a shorter path, because that seems like an awful lot of assumptions. then again, economics has always seemed like a steaming pile of nonsense, to me.

"less job security = more motivated workers = higer productivity = more profit = more money for more employees"

Recently in the US we've gotten all but the last one.

Thanks for the answers to my question.
It still makes no sense. If an employer has no work I would have thought that that was a legitimate reason to reduce staff. Redundencies are a fact of life.
the US isnot the only place where the last one "more money for the employees" is not happening. Profit for the sake of profit seems to be more important than anything else.

Debbie,

It's similar to the law and econ example of the poor widower's apartment. While it may seem harsh to allow the landlord to evict the poor widower in the middle of winter, if the landlord is not allowed to do so, he won't rent the apartment to poor widowers in the first place. Or so the story goes - as an empirical matter I don't know whether allowing easier firings means more hiring, or simply more firing.

"The departure from equal positions is not being accrued to the least well off--and is in fact harming them."

Well, I am not going to attempt to use Rawls on this, but I know I would rather be a 23-yr-old, fresh from college, living at home and unemployed...

than a fifty-yr-old, with a mortgage and kids in college, outdated skills and recently laid off. Wealth is usually accumulated after age 40 our so.

"Least-well-off" may be more complicated than you are stating here.

I think the key question is whether France is, in fact, much different (in an "structural economic sense") than any of the other G8 countries. And I think "Jerome a Paris", who wrote the DailyKos diary, and who is cited in the FOE story mentioned by Jackmormon, presents a pretty solid argument that the differences really aren't as great as is being presented in the "Anglo-Saxon" press.

Which is to say I think Sebastien - and I mean this most humbly and sincerely - really needs to take a step back and reexamine the underlying assumptions upon which this post is based.

Pooh is right. The OECD has done quite a lot of empiric work on the effect of employment protection legislation (EPL, in the jargon).

It doesn't affect the total level of unemployment much (high French unemployment has more to do with other problems in their labour market) because while it slows the rate of people moving from unemployment to work it also slows the rate of people moving from work to unemployment. But it radically changes who is unemployed - in short, it locks the 'bad risks' out of work, in exactly the same way anti-eviction laws lock the poor widower out of the housing market. Where strong EPL exists, unemployment stays confined to a relatively small set of the population but they stay unemployed for a long while. IOW, it creates an underclass.

Then the changes indicated in France (& in Aus) would make no difference to numbers of unemployed. Why do we let our govts treat us as though we are idiots?

"...in short, it locks the 'bad risks' out of work"

Well, a permanent underclass is a problem, but I believe a society or gov't or corporation can have more complex goals than mere profits, or see productivity as having multiple factors. The creation of a stable secure middle class has many benefits to society, America for while recognized this, and as far back as Pullman and Ford for instance took measures that would now be considered inefficient.

Maybe it would be bad neo-classical economics, but could we see the labor force as a product rather than a commodity? We do do this a lot, but at one time public education and the welfare state were movements toward productivity (creating assets?) rather than drags on productivity.

If you have any French, the Le Monde special edition on the CPE is quite good. Though I believe it leans conservative, it has this op-ed that is quite fun to read (how would one translate that title?) to get the undercurrent of sarcasm. If any of our pundits did this, they would be asked to sit next to Dave Barry in the box labeled 'humorous' and be ignored.

Thanks for the links, spartikus and jackmormon. Fascinating analysis of France's job market vis-a-vis its economy vis-a-vis its culture. Plus some discussion of the Nordic countries' economies and job policies.

Much of the problem, from the young unemployed point of view, seems to be the difference between the types of employment contracts, and how the type of contract one has ripples through the rest of one's economic options. The "lack of jobs" is really a lack of permanent job contracts. Without a permanent contract, for instance, it's very difficult to find a place to live, as landlords prefer tenants who can reasonably expect to remain employed. de Villepin's proposed policy, if I understand it correctly, does nothing to address that issue and in fact makes it worse, by removing even the few and scanty protections young non-permanent workers currently have.

The current demonstrations, while not directly related to the previous riots in the banlieu districts, do seem to spring from much the same sense of purposelessness. It's not that the young and unemployed are in dire poverty - France's social safety net makes sure of that - it's that they see no opportunities for using their wits and talents, for "making something of themselves" by pursuing a career, being productive, being independent. They don't want to stay on the dole their whole lives; they don't want to be considered expendable - these are laudable things, I should think.

Sebastian: I don't know enough about France to comment on the situation there. (I have not read a paper or seen the news, except in passing, since Wed.) (Tee hee.) However, about Rawls:

I think you're wrong there. First, according to Rawls, you should assess the basic structure of society generally, not individual proposals. (This is quite important: it's like assessing a game in its entirety for fairness, not assessing individual rules.)

Second, you have to consider how a system stacks up against both principles (including both parts of the second), not just against the difference principle.

Third, if employment were the only good in a society, your argument would (as regards the difference principle) be right. But it isn't; and this is, I take it, the point of the argument you quote. Suppose the unemployed are the worst off in both the US and France. You would then need to ask: in which country are the unemployed worst off? I would think the answer would be: in the US, where they have (for instance) no health insurance.

If you had to choose between adopting a system in which more people got jobs, but those who didn't were much worse off (US), and one in which fewer people got jobs but those who didn't were better off (France), the difference principle would say: go with France: that's the system in which the least well off people will be best off, absent some argument to the effect that the US policy will make even the unemployed better off over time.

I would think that if you wanted to argue for the US system over the French, the principle of fair equality of opportunity would be a better bet. (And it takes precedence over the difference principle, too.) However, to make that argument you'd have to deal with the stats that show social mobility plummeting in this country, and the various arguments to the effect that our lack of any sort of safety net is locking in class differences.

Feel free to ask any Rawls questions that leap to mind. (We live to serve ;) )

Ah, I didn't realize that principles of justice couldn't be used on individual proposals. That rather dramatically limits their usefulness I would suspect since at no point is it possible to design a society from scratch.

Sebastian: Ah, I didn't realize that principles of justice couldn't be used on individual proposals. That rather dramatically limits their usefulness I would suspect since at no point is it possible to design a society from scratch.

Quite. Which is why when you are advocating societal change, you need to look at how the changes you propose will affect the whole of society, not just the tiny sector of it you happen to be interested in at this point in time.

I know nothing much about France, but on the subject of neoclassical economics, I think one should take its pronouncements on the causes of unemployment (or anything else) with a grain of salt. The argument that raising the minimum wage also raises the unemployment rate used to be portrayed as a simple, unambiguous logically inescapable application of basic economic principles, until Card and Krueger actually bothered to do empirical research on the question.

Sebastian: it doesn't really limit their usefulness; it's just that (as Jes said) you have to think of them in the context of the basic structure as a whole, and consider whether it is more fair with or without them.

Suppose -- I'm not feeling good at examples just now, so I won't make one up, but: you can imagine a group of several proposals, each of which seems unfair on its own, but whose cumulative effect is to make everyone better off. (Possibly one helps most people but produces some real unfairness for the worst off; and another which helps the worst off given the first proposal, and removes that unfairness, but would not do so on its own, and moreover seems, on its own, unfair. If you have to consider each individually, the whole package fails; but given both together, everyone is better off. Rawls' view says, sensibly: consider both together.)

It's also crucial to realize that the two principles are meant for the assessment of the basic structure, not for individual acts or even laws. There's a whole raft of objections to his view that go like this: gee, I guess it's unfair for me to give money to my local art museum, since it won't help the least well off. I guess I couldn't even try to help the second least well off person! That seems silly. -- To which the answer is: look, the principles are meant to answer the question: which sort of basic structure should we have? Which rules of the game are fair? Given a fair set of social institutions, you get the money you earn, and can give it to the local art museum, or your lover, or Bill Gates if you want. The two principles are not meant to govern the actions of individuals; they are meant to allow us to assess the justice of the basic structure.

The argument that raising the minimum wage also raises the unemployment rate used to be portrayed as a simple, unambiguous logically inescapable application of basic economic principles, until Card and Krueger actually bothered to do empirical research on the question.

Yes, because phone surveys of fast-food restaurants empirically prove that there is such a thing as a free lunch.

Well, neoliberalism promises a free lunch - in the end. I've noticed that proposals where I'm expected to give up someting now for unenforceable promises of repayment later are a bad idea.

Oh, Sebastian - you made a claim about Marxism over on Crooked Timber, in the 'Republican War on Science' symposium. I asked you to back it. I'm still waiting.

"Oh, Sebastian - you made a claim about Marxism over on Crooked Timber, in the 'Republican War on Science' symposium. I asked you to back it. I'm still waiting."

Three responses. A) This is not that thread. B) This thread brings up an interesting point with respect to totality of arguments that applies to that point. C)Marxism in the university was both overconfident about its predictions and resistant to the facts and real world implications about its predictions and how they played out in the world. If you for some reason aren't aware of that, I'm not interested in conducting a full explanation of an ancillary point at this time. You may choose to believe that it didn't if you wish. And you may also notice that choosing to believe that doesn't change my argument, that a focus on truth is a better response to bad science and bad social science than relativizing and playing on bad science's terms, much at all. For example if you choose to believe that Marxism was mostly correct about its empirical claims the argument still applies to those areas where it was not. If you choose to believe that it was wrong about its empirical claims but that historically very few people in the university embraced Marxism despite the evidence of its problems in the 1930s, 1940s and 1950s my point still applies to those who did. If you object soley to the number I suggest you may say so and I will say that I think you are wrong, but it isn't important enough to the overall argument for me to to look up things I read a decade ago.

I'm happy to do further research when it is crucial to my main point (well happy is a strong word) see for example here where I ended up reading 4 10-Ks this week.

And I didn't even see this on the other thread "I’m still waiting, Sebastian. Let’s start with ‘Marxism’ being a ‘Social Science’. I’ve never heard of a field called ‘Marxism at any university."

Marxism is a branch of economics.
Economics is a social science.
Marxism is a social science.

Furthermore Marxist Studies classes and classes with descriptions that include direct references to Marxism as a theoretical approach can still be found in many universities all over the country. See for example the Marxist Studies minor available at UC Riverside or peruse the different social sciences course descriptions at most major universities. Try any University of California campus for instance.

Can you see why I hesitate to do research on ancillary matters for someone who isn't aware of the most basic things in the discussion? If you can't accept that Marxism is a social science what ridiculous question can I expect next? Are you going to ask me to define university? When I talk about the cost of drug prices in the context of the pharmaceutical companies are you going to call me out for not knowing the current street price of cocaine?

Vital Breaking News Flash:

Sec. of State Condi Rice confirms what we've suspected all along:

"Iran is NOT Iraq."

@Jonas Cord:

Facts vs. snark:

The minimum wage has found unexpected support in a new quarter. Data from David Neumark and William Wascher, two long-time critics of raising the minimum wage, have vindicated an important study that found that a moderate increase in the minimum wage did not reduce employment.

The original study, by Princeton professors David Card and Alan Krueger, looked at data from the New Jersey fast-food industry after the state raised the minimum wage in 1992. It received heavy criticism in the spring and summer of 1995 after the Employment Policies Institute, a research organization funded by a cross-section of manufacturers, restaurants, and retailers, charged that Card and Krueger’s findings were the product of mistakes in the two economists’ data-gathering procedures.

The Employment Policies Institute gathered its own data on a small group of fast-food restaurants and made them available to economists Neumark, of Michigan State University, and Wascher, of the Federal Reserve Board. Neumark and Wascher have since evaluated the Employment Policies Institute data, plus a separate sample that the two researchers collected themselves, in three versions of a paper that reexamines the Card and Krueger study. The most recent version, which separately analyzes the Card and Krueger data, the Employment Policies Institute data, and Neumark and Wascher’s own data, shows that the Card and Krueger data and the Neumark and Wascher data reach the same conclusion: the April 1992 increase in New Jersey’s minimum wage did not reduce employment in the state’s fast-food industry.

According to Neumark and Wascher’s analysis, only the small sample of data obtained by the Employment Policies Institute, using a selection method the organization has not disclosed, indicate a measurable negative effect of the minimum wage on employment.

The Minimum Wage and Job Loss: Opponents of Wage Hike Find No Effect, 1996, John Schmitt, Economic Policy Institute

Taking this issue away from the specific text quoted, and out of France, I'd like to point out that there is no contradiction between a generous social insurance system and a flexible job market. Some even say that the two complement each other.

Marxism--like capitalism or institutionalism--is neither a branch of economics nor any other kind of social science. Social science is the study of various systems in search of answers to basic questions; articulations of possible answers (such as Marxism) are theories or schools of thought, not the science itself. No more than evolution is biology.

Sebastian: "And I didn't even see this on the other thread "I’m still waiting, Sebastian. Let’s start with ‘Marxism’ being a ‘Social Science’. I’ve never heard of a field called ‘Marxism at any university."

Marxism is a branch of economics.
Economics is a social science.
Marxism is a social science."

According to that, 'Chicago School' is a social science.


"Vital Breaking News Flash:

Sec. of State Condi Rice confirms what we've suspected all along:

"Iran is NOT Iraq.""

Posted by: xanax


Now I'm really confused. Does this mean that those who opposed the invasion of Iran are no longer America-Hating Appeasers of Terror?

Are those who advocated that invasion now Dangerous Oppenents of The USA? (since to oppose the administration line is to oppose the country)

I feel like a Soviet citizen - the unchanging Party position changes so often, and being late in changing can be disasterous.

Nell,

Facts vs. snark...

More facts:

1. The briefing paper you cite is old, and while it says Neumark and Wascher did not make the payroll data available, it is certainly available now.

2. The briefing paper says N&W's payroll data has questionable validity because it differs significantly from C&K's survey data. That's assuming C&K's data isn't flawed, and while I'm no statistician, that's some sort of fallacy right there - given that one is payroll data and one is survey data.

3. Coming to the conclusion, as so many seem eager to do, that raising the minimum wage is "free" and has no ill side-effects from the detailed study of selected New Jersey chain fast-food restaurants is completely insane.

I like Yglesias' observations, but don't often link to them because they seem a bit too much insider baseball and are just placeholders rather than extended pieces, but this observation was interesting.

It's also worth saying that the Franco-American labor market contrast has two separable elements. On the one hand, French policy encourages job stability at the price of higher structural unemployment. On the other hand, French policy encourages more leisure time at the price of lower incomes. The first set of policies is a bad idea (though going all the way over to the American side also seems like a bad idea, the French left doesn't seem to appreciate the possibility of a middle ground) but the second set of policies has a great deal to be said in its favor.

Barry: " the unchanging Party position changes so often, and being late in changing can be disastrous."

...or even NUCULAR!

(Sorry to be so OT on this thread but it's clear now that "Condi" is short for Condescending.)

Flame-war note:

Any dumbass using "the Left" in a post (non-sarcastically) is automatically presumed to be a National Socialist and therefore a pointless target for dialogue.

Suck it, Nazi.

Stickler, considering what Sebastian actually wrote in his flame-war note--

"I'm not making any comment about why the left does or doesn't use the argument I outline"

--your comment strikes me as being unhelpfully combative.

It's difficult to talk about France's society and economy, how to think through the various problems and proposals offered to address them, how to cut through the general American aggressive indifference towards foreign systems of governance. I read Sebastian here as trying to reach out beyond his ideological comfort zone. No, the various lefts in America aren't going to line up with the various lefts in France, but the former amorphous grouping will probably give a better understanding and defense of the latter than the conservative US media will.

Maybe you were making a mordant joke. You might consider starting up your own "IrefusetoengageconservativesatObWi" blog--or commenting over at Hating on Charles Bird. Can't there be one blog out of the millions where people can debate each other in good faith?

Debbie:

It still makes no sense. If an employer has no work I would have thought that that was a legitimate reason to reduce staff. Redundencies are a fact of life.

Not in France. That's the point, see?

"I would have thought" is not an argument.

McDuff,
that's overstating it a bit. An explanation on French Licenciement pour motif Économique is here. The key problem is this:

termination of the contract must derive from the abolition or alteration of a post or from refusal to accept a substantive change to the contract of employment.

This link also points out that the other difficulty is in calculating severance pay.

Japan has a similar system, but have been able to avoid the problems by making the court process very long (some cases that I know in the union that I have worked with have been trying to get a settlement for over 5 years) In fact, the changes in the French redundancy law at the beginning of last year moved towards a similar situation. Unfortunately, the proposed CPE seems to, if I understand it correctly, create a period not unlike that involved in getting tenure. However, having it applied to an entire cohort raised red flags.

Stickler, be sure and read the posting rules. And after that, please follow them.

I was going to disemvowel it, but I think I'm going to just let it hang there for a while. I'm not sure it's embarrassing for stickler to have written that, but I am sure that it ought to be.

Thanks for the link to the DailyKos diary, spartikus.

Hilzoy, I have been thinking this weekend about the idea that the "Principles of Justice" applies only to an analysis of whole societies (presuming of course that someone thinks they are useful at all). I wonder if that might only be true when comparing societies to each other. If you are comparing the US to France you might want to look at the whole series of tradeoffs and see how they play out before invoking the Principles but that doesn't have to be so when talking about modifying or choosing not to modify a current method of doing things within a society.

Take the Yglesias quote that liberaljaponicus provides: "It's also worth saying that the Franco-American labor market contrast has two separable elements. On the one hand, French policy encourages job stability at the price of higher structural unemployment. On the other hand, French policy encourages more leisure time at the price of lower incomes." One of the policies he is talking about there is the 35 hour work week. I think he is misinterpreting what happened in France about that--the 35 hour work week was implemented to address the chronic unemployment problem in France with the hope of encouraging employers to take more employees to cover the work not done. The idea isn't as seperable as he thinks. But, if we analyze that policy from the point of view of the Principles of Justice it seems justified to trade 5 hours of work week from the middle class to try to help out the unemployed.

It seems to me that if the Principles of Justice have any real world application, it would be by analyzing things that way.

Seb: I really have no time to comment (same as the last four days, only now I am back from my own private Idaho), but: you can compare the society in question with and without the proposal, as well.

Fwiw, and given my lack of detailed knowledge of France, I'm inclined to agree with Matt Y.

Possibly I got sidetracked by one feature of your post: it seemed as though both the argument you cited and then you moved from the question, are France's employment policies best? to the question, is it worth being taxed for all this stuff, even given the chances of higher unemployment? To answer the first, you could compare France with and without the employment proposal. But answering the second (taxes) without considering the other benefits cited in the argument -- e.g., health insurance -- and the fact that they make the position of the least well off better in France than here -- seemed to me something that Rawls would not do.

I'm comparing with and without employment policy--in order to compare tax policy I agree that you would need to look at all the things (or all the substantial things) that the tax policy paid for.

McDuff,

Thanks for the link. I'm puzzled by this;

"the reason for dismissal must not relate to the person of an individual employee,"

Does this mean an employee cannot be fired for incompetence or negligence, or does it just forbid racial discrimination, etc.?

Whoa. That post was not meant for this site. Wires must have crossed last night: I was, apparently, multitasking sloppily.

My apologies about the language upthread. I'll endeavor not to repeat the mistake. Feel free to disemvowel it if that seems appropriate.

Out of curiosity, where did you intend to post that comment about Sebastian?

Bernard, it was LJ, not McDuff, who supplied the link. My reading of the restriction you mention is that it prevents an employer from using redundancy as an excuse to get rid of a particular employee when that's not the real problem. IANAL, still less a French one, but I'm pretty sure that a "contrived" redundancy would be frowned on in any EU country.

Out of curiosity, where did you intend to post that comment about Sebastian?

One would assume it wasn't meant to refer to Sebastian...

Other than it quoted him, and then referred to that quote, point taken.

I'll just say that I was having two rather similar online conversations at the same time.

Both concerned an annoying habit I've noticed, whereby conservatarian commenters use "The Left" as a throwaway strawman signifying nothing at all.

And then, I opened up the comment window here at ObWi, got distracted, and forgot which witty bon mot went where.

And now, let us never speak of this shameful episode again.

Ok, got it.

I'll remove it if you'd like. Leaving, of course, a placeholder so that Gary knows that someone did something to a comment.

BTW, I know it's been pointed out several times, but when referring to The Left, one should always link The Left properly.

Um, Liberaljaponicus, I'd probably translate the title as "It's Prestofantasomagical!"

Sigh. At least French is easier (modulo Rabelais) to translate then Japanese. I remember a long discussion with a co-worker about exactly HOW to translate a piece of tricksy business terminology until we finally threw up our hands and decided to leave it as one of the "untranslatable words". Yappari, na...

(Oh god, the neighbor's dogs are holding one of their "I can bark louder than you can" dominance battles....)

Apologies to LJ for the misattribution.

But I'm still not clear whether this permits firing an individual for poor performance, or whether only actual business downturns (or maybe extreme misbehavior like theft or chronic absenteeism) are considered good grounds for dismissal.

"And now, let us never speak of this shameful episode again."

What shameful episode...?

:)

Totally OT: some may find this thread at Daily Kos, which in part discusses ObWi, to be of interest

"The chances of getting a job are being sacrificed in younger unemployed people for the benefit of the currently employed. "

Gotta agree with Sebastian here. Having grown up in an area with 20%+ unemployment (which now has <5+% unemployment, miraculous if jarring turnaround), there's nothing as dehabilitating as mass youth unemployment for sucking the dreams out of someone's soul at an early age.

I've always thought of the absence of such mass youth unemployment as a strength of the US system.

Now, if we can do something about the healthcare system...

rilkefan:
Thanks for the link: anyone interested ought to also check out this diary at Tacitus which is what started it all - made me, for one, glad that there is always an ObWings to come back to: metablogging issues always seem to start brawls, no matter how decorous the blog.

But I'm still not clear whether this permits firing an individual for poor performance....

Certainly that’s permitted, but employers argue that tribunals tend to take the side of the worker, who seldom admits to poor peformance. Here is a summary of the rules:

Fair: dismissal for economic reasons such as economic difficulty, reorganization or technological change, or for reasons related to the conduct or performance of the employee, such as:

- Flagrant misconduct, following unacceptable behaviour on the part of an employee, such as fraud, industrial espionage or theft.

- Gross misconduct, following behaviour which precludes the continued presence of the employee in the company, such as insubordination or harming the security or interests of the company.

- All other cases, which include personal reasons such as personality clashes, continual aggressiveness, or professional reasons such as incompetence or poor performance.

Unfair: prohibited grounds for discrimination: trade union members, pregnancy, origin, sex, family status, race, nationality, political opinion, religion, disability, exercise of right to strike.

From: Employment protection and labour market adjustment in OECD countries, a 352">http://ilo.law.cornell.edu/public/english/employment/strat/download/etp48.pdf">352 KB PDF file.

To return to the original post, there's a lot I don't understand about libertarianism, and employment law is part of my confusion.

we could, in theory, live in a libertarian paradise where there is no minimum wage and no social support networks. One immediate consequence would be the return of slavery (ahem, indentured servitude) and staggering poverty, especially among the elderly (or does anyone really want to debate the extent to which Soc.Sec. prevents elder poverty).

Another feature of this libertarian paradise would be the complete inability of women with young children to live independently of the father.

Another feature would be the suppression of innovation, as free labor would virtually always be available and less expensive than capital.

Illegal immigration would end, though.

Now, the majority of both French and American voters have decided that this is not the world they want to live in. So we have minimum wage requirements which (more or less) allow unskilled individuals to be able to survive without govt assistance on their wage, and a series of safety nets (with a relatively coarse weave) designed to capture those who cannot work (elderly and single mothers, mostly).

So, even if minimum wage suppresses employment, it is a trade-off worth making, because we as a society would end up subsidizing the income of these families anyway.

yes, there are inefficiencies -- like the fact that a portion of minimum wage earners are young adults living with their parents. but that can be accomodated (and is) by setting minimum wage below the poverty level and providing an EITC to heads of households.

Brad Setser has an interesting take on France, which led me to another PDF, this time 409 KB: European Unemployment: The Evolution of. Facts and Ideas by Olivier Blanchard.

rilkefan,

Interesting discussion. I don't agree with Armando that we are not willing to call lies by their proper name. We both don't go for the word as a general rule and require a higher standard than Kos or Redstate, including presenting evidence. By the time someone is properly refuted here, typically both the poster and the audience know it.

Francis,

we could, in theory, live in a libertarian paradise where there is no minimum wage and no social support networks.

I don't know why libertarians would want no social support networks - in fact, most reasonable libertarians that I've read place a high value on them to solve social problems.

One immediate consequence would be the return of slavery (ahem, indentured servitude) and staggering poverty, especially among the elderly (or does anyone really want to debate the extent to which Soc.Sec. prevents elder poverty).

Social Security does help allieviate elder poverty - while contributing to impoverishment of workers. If it were only helping elderly people in actual need, I'd be all for it.

Another feature of this libertarian paradise would be the complete inability of women with young children to live independently of the father.

I'm not going to argue against programs that help working mothers, but the idea that the government is the primary provider of that benefit is silly. Most young mothers I've met relied heavily upon their own families for support. It sucks, but it doesn't mean they have to shack up with their nogoodnik boyfriend, and no amount of libertarians dystopia would stop it.

Another feature would be the suppression of innovation, as free labor would virtually always be available and less expensive than capital.

That may be true, but why labor should be made expensive is beyond me. In fact, during this horrifying "immigration debate" we're currently inflicted with, I heard about an apple farmer in upstate NY who pays illegal immigrants $7 an hour to pick the apples. I don't think the "doing jobs Americans don't want" argument holds up here, because that's not a bad deal for a low-skill job. The problem is that an American citizen at $7 an hour costs the employer close to $14 after SS, Medicare, taxes, workers comp, etc.

If anything, I think we're suffering from unnecessarily expensive labor these days.

So, even if minimum wage suppresses employment, it is a trade-off worth making, because we as a society would end up subsidizing the income of these families anyway.

But why make the trade-off when we could raise wages through the EITC, funded by taxes on the richest 1%? That's strictly speaking still an economic trade-off, but one that looks to me to be far better than suppressing employment.

yes, there are inefficiencies -- like the fact that a portion of minimum wage earners are young adults living with their parents.

It's not inefficent, I'm guessing. Teenagers who do not graduate from high school or don't get a good education, if they work in their teens, are far more likely to be able to have a career in adulthood than their layabout peers.

But I'm still not clear whether this permits firing an individual for poor performance, or whether only actual business downturns (or maybe extreme misbehavior like theft or chronic absenteeism) are considered good grounds for dismissal.

I only have anecdotes, which are not data, but I recall how I ended up teaching a class prépas (basically 13th grade, French students often repeat their senior year to make sure they can pass the baccalaureat exam) because the teacher basically blew off the class. The other students and teachers really disliked him, and were happy to have him not come to school. I didn't probe into why they didn't demand that he be dismissed. Fast forward 20 years, and here in Japan, you have basically the same type of labor regime. However, the strength of social approbation is much stronger so it takes a person either very strong or very obnoxious to deal with it.

Also potentially related is Akio Morita's thought that a company should aim to hire something like 30% high flyers, 50% stolid performers and 20% dead weight, (I may have the % wrong, but that's the general idea) because it is impossible to completely eliminate the dead weight, and one can never be sure what talents may emerge. (of course, Sony's recent performance might be taken as counter evidence) This seems to be a workable model if the investors are willing to afford some patience, but doesn't work when the demand rapid return on their investment.

A follow on comment. Rilkefan and Jay C point to the discussion about banning going on at Tacitus, RS and DK. From what I understand, the DKos rating system is in a way akin to the Japanese labor system, in that if a large enough number of community members troll rate a post, the poster is banned. I don't want to get in an argument about groupthink and such, but regardless of your thoughts about DKos (I'm favorably inclined, but I have only checked out comments a handful of times), you cannot deny that the mechanism of enforcement that has developed 'works'. I'm a little less favorably inclined towards the Japanese labor system (having heard some hair-raising stories about labor grievances), but a labor system, like a community blog, needs to work in the aggregate. The DK/Japan system creates certain generally held beliefs which, when viewed from the outside, may appear very stifling. On the other hand, the RS system, which seems very top-down to me, works well when everyone is moving in the same direction, but when the top and the masses are going in differing directions, (as seen with the Domenech debacle), the whole thing spins apart.

These observations should not be taken as a personal attack on members of the two communities or the communities themselves.

Sorry, three comments in a row from me.

Sebastian wrote:

the 35 hour work week was implemented to address the chronic unemployment problem in France with the hope of encouraging employers to take more employees to cover the work not done.

I don't think it was that simple. I did want to pass on this link to a Google cache of a Brookings institute analysis about the 35 hour workweek. It is true that it was designed to alleviate unemployment, but not to get more more workers to cover for the lost time, but to provide more flexibility, so that companies could more efficiently allocate their workforce. from the analysis

Samsonite workers, for example, have agreed to work 42 hours per week in the summer, when the demand for baggage is high, in exchange for a shorter 32 hours-per-week schedule in the winter.6 At Carrefour, the French retail giant, cashiers have agreed to adjust their duties and work times in accordance with the number of customers in the store.7 This kind of flexibility is possible because the loi Aubry requires only that weekly work time average to 35 hours across the year. This so-called annualisation can reduce the amount of overtime a company must pay, while also reducing layoffs in the off season.

The big losers, and the ones most likely take to the streets in protest over the RTT, are those sectors of the economy that cannot increase productivity through flexible work times.

Much of the US/UK press simply reported this as a measure against unemployment without talking about how it was to deal with unemployment, but the policy was designed to create more job stability in hopes of revving up the economy, which would then allow companies to hire more workers. How separable the two notions posited by Yglesias may be is open for debate, but the policy was not simply a redistribution of hours to increase employment notion.

One should also note that when the center-right government took power, the worked at eroding this, voting for the restrictions to be lifted on private businesses immediately after they took power last year. This is unfortunate because it evidently met with wide approval. In fact, I believe this sort of, flexibility is the norm in the Netherlands and Germany but it seems that the name of the game is refusing to accept any innovations brought on by the opposing party in favor of more clearly defining the differences.

One should also note that when the center-right government took power

Whoops, on checking, it was 2005 when the law was relaxed, but Chirac's election was 2002.

"Much of the US/UK press simply reported this as a measure against unemployment without talking about how it was to deal with unemployment, but the policy was designed to create more job stability in hopes of revving up the economy, which would then allow companies to hire more workers. How separable the two notions posited by Yglesias may be is open for debate, but the policy was not simply a redistribution of hours to increase employment notion."

I'm a little confused. How does the 35 hours averaged over the year change my analysis? Assume you have 240 hours per week of work. Under the 40 hour week you can hire 6 people. Under the 35 hour week you must hire 7. Assume that for half the year you have 200 hours per week of work and for the other half you have 280. If you are allowed to average over the year you still can hire 6 people under the 40 hour work week and must hire 7 under the 25 hour work week. It may very well be that they government bundled flexibility into the work week rules so that under the second scenario you don't have to hire 8 people (that would be a serious hardship to seasonal businesses), but that is different story. The flexibility issue doesn't change my analysis at all. It independently a nice feature, and that's great.

That 25 should be a 35.

I'm a little confused. How does the 35 hours averaged over the year change my analysis?

There's a difference between an analysis and a reason. You said

35 hour work week was implemented...with the hope of encouraging employers to take more employees to cover the work not done.

I don't think anyone explicitly stated this, but rather, that the goal was moving towards the flex-time notions that are quite common in Northern Europe. (Perhaps Dutchmarbel could chime in here and discuss the time flexibility in working in the Netherlands)

Presenting a plain equation that supposedly proves that a company has to hire more workers makes a large number of assumptions, the most problematic one is that hours worked are as fungible as you assume them to be. I think what was the base "presented" assumption by the Socialists was that the rigidity of the workweek was problematic, and a reduced workweek where the principle of annualisation was incorporated would be an improvement. A potential hidden rationale might have been that it force a round of negotiations onto businesses (it was the socialist party after all) as well as an appeal to the workers and this turned out to be the case, because the article notes that:

Whatever the policy's impact on job formation, France's labor unions are happy with the shorter work week for traditional ideological reasons. They feel that shorter working times are simply better for workers' quality of life, and recent polls of white collar workers suggest that they mainly agree with them.

In sum, the reason you might propose something like this would be to force employers to hire new people, but the reasons that were given were not to hire new people, but to provide flexibilité

"I don't think anyone explicitly stated this, but rather, that the goal was moving towards the flex-time notions that are quite common in Northern Europe. "

No it has been explicitly stated that an important purpose of the 35 hour work week was to force new hires because you couldn't get the work done with as few people.

See for example Wikipedia:

The main stated objectives of the law were twofold:

To reduce unemployment and yield a better repartition of work, in a context where some people work long hours while some others are unemployed. A 10.2% decrease in the hours extracted from each worker would, theoretically, require firms to hire correspondingly more workers, a remedy for unemployment.
To take advantage of improvements in productivity of modern society in order to give workers some more personal time in order to enhance their quality of life.

or the Telegraph

The 35-hour week came into effect in 1997, as the Socialists' big idea for reducing unemployment. Unemployment fell until 2000, while the economy boomed, but has since risen again, to just under 10 per cent.

Employers despised the plan from the start, as they were forced to keep salaries at the same level while getting less work from their employees.

Or in a paper to be given at the German Institute for the Study of Labor:

Aiming at lowering unemployment, the French government mandated the reduction of the standard workweek from 39 to 35 hours in 1998 to be implemented in large firms by 2000 and in small firms by 2002. The difference in timing by firm size is used to set up a quasi-experimental design to analyze the effect of the law on workers’ welfare. The law may have worked as a coordination mechanism to improve welfare in the presence of strong positive complementarities in leisure among individuals, or it may have introduced distortions and made workers worse off. Estimates from the French Labor Force Survey for the years 1993 to 2000 suggest that the law did not make workers happier.

Roger Cohen NYT October 11, 1997:

Facing an abrupt rise in interest rates that could slow the economy, French Prime Minister Lionel Jospin on Friday proposed a law to cut the French workweek to 35 hours from 39 hours as a means to create jobs.

Speaking at a conference of employers and labor unions, he said he would submit draft legislation to Parliament by the end of the year aimed at establishing a workweek of 35 hours by Jan. 1, 2000.

The proposed law follows a campaign promise to shorten the workweek. He also proposed state financial aid of about $1,500 per employee next year to any company that would reduce the workweek of employees by 10 percent while increasing its staff by at least 6 percent.

The proposals are aimed at curbing unemployment, now 12.5 percent. Joblessness, which has been rising steadily, especially among the young, has become a major source of anxiety in French society.

Sebastian,
If you read the wikipedia entry carefully, note the following words

To reduce unemployment and yield a better repartition of work, in a context where some people work long hours while some others are unemployed. A 10.2% decrease in the hours extracted from each worker would, theoretically, require firms to hire correspondingly more workers, a remedy for unemployment.
To take advantage of improvements in productivity of modern society in order to give workers some more personal time in order to enhance their quality of life.

Furthermore, your second link from the Telegraph is overstating, I think, when it says
as they were forced to keep salaries at the same level while getting less work from their employees.

The unions used the 35 for 39 phrase, but the government's argument was that better utilization of labor would increase productivity. Ironically, this argument seems similar to the idea of tax cuts and trickle down.

Because the UK press takes a more ideological stance, you can tell where the Torygraph is coming from when it has an article touting the statements of Sarkozy under the title French 35-hour week 'a disaster'

I assume that the citation of the German Institute for the Study of Labor paper (which is quite interesting, so thanks for linking to that)is to highlight that French workers aren't really happy about the work week. This point is strange given that French unions made the 35 hour week one of their mobilisation points just one month ago. It is also counter the consensus as I understand it (see this pdf), however, Paul Krugman was dead set against this as well, so you can enjoy being on the same side of the fence as him.

As I noted before, the Anglosphere press did not do a good job in explaining the reasoning behind the plan. Cohen NYTimes article is an good example of the problematic discourse. It leaps from Jospin's remarks at a conference to campaign promises and conflating the two. Absent a transcript of what Jospin says, I'm willing to bet dollars to donuts that there was some difference involved, at least in terms of nuance.

I'm not saying that the question of generating new jobs was never considered. But note the difference between generating new jobs and your analysis that subtracts 35 from 39 and argues therefore, the employers 'must hire' new workers. I'm certainly interested in a discussion about these issues (and specifically noted that Yglesias' blog posts are often placeholders rather than fully thought out pieces), but if confronted with reductive 39-35=4 QED 7 people must be hired, I'd rather not.

Liberal Japonicus:
I don't think anyone explicitly stated this, but rather, that the goal was moving towards the flex-time notions that are quite common in Northern Europe. (Perhaps Dutchmarbel could chime in here and discuss the time flexibility in working in the Netherlands)

I'm late, had a very busy week...
We have a 40 hour workweek (on average), but many sectors count a 36 hours workweek as a full week. My spouse works at a bank, and he works 4 days of 9 hours, which leaves him with one day to be housefather - something that is important to both of us. A friend of hours worked 40 hours a week and thus saved enought time to travel through Australia and Canada for 4 months with his wife and kids - another option.

Previously spouse (and I) worked in the ICT sector though, and that is a rather old-fashioned environment. If you do not work overtime, you are not really motivated... that kind of culture. Your contract may be for 40 hours, because that is legally obliged, but if you really only work 40 you will be out of a job the next reorganisation.

Part-time & temporary workers are a really big part of our workforce, but most of those are female and most of those have a partner with an income that is higher than theirs. Motivation for workers has more to do with our "stay at home mum" culture (schooltimes are really inconvenient f.i.) than with preserving jobs.

When we tried to battle unemployment (though ours is not really that high) we did it more via the wages than via the workweek hours. Part of our poldermodel (general aim for consensus) was an agreement to raise the general wages only slightly, so that companies would not have to lay off lots of people in reorganisations.

And especially for you, LJ, a comparison (.pdf) between Japan and the Netherlands in that area :)

this is the pdf file I hope. Somehow inserting a pdf link seems harder for me that just an html-link.

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