Thursday, March 25, 2010

Choice on a Macro Scale

In an article titled Europe's Choice: Growth or Safety Net (subscription content, but poke around for the title on your browser) in today's issue of The Wall Street Journal, there is a good explanation of the choice and trade-offs facing the member states of the European Union.

Europe has not rebounded from the current malaise, even to the extent that has been seen in the U.S. And many observers believe that the reason for poor performance has been what many believe to be an over-generous safety net for Europe's workers. Labor laws and unemployment benefits are a bane to European employers, imposing costs that keep them from hiring or rehiring workers - essentially an incentive to not create jobs.

Concurrently, the level and duration of benefits can act as an incentive to workers to stay "on the dole" and makes finding a new job less imperative.

The story has an accompanying video (mostly useful for investors) and an interactive graphic showing a timeline for the crisis faced by the EU.

I look forward to your comments.

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