unemployment rate

Unemployment is now higher in the U.S. than in Europe,  reports the Washington Post.  “The official U.S. unemployment rate, reported last Friday, now stands at 10.2 percent,” compared to “9.7 percent” in Europe.   This is the highest rate in more than 26 years, and marks a huge change from the recent past, in which unemployment was double the American rate in much of Europe, such as in France.

Unemployment is at 10 percent in France, which refused to adopt a U.S.-style stimulus package, and only 7.6 percent in Germany, which adopted a stimulus package that was smaller relative to its economy than ours was.  (Countries that refused to adopt big stimulus packages have fared better than those that imitated President Obama. And the biggest-spending countries have suffered worst in the recession.)

A “broader measure of U.S. unemployment,” including discouraged workers, puts U.S. unemployment at 17.5 percent, reports the New York Times.

As the Post notes, “For many on the left, the lament for years has been: Why can’t America be more like Europe? Why can’t rustic Americans be more like sophisticated Europeans? The sentiment has resurfaced in recent months as the health-care debate has raged on — why can’t the American health-care system be more like Europe’s?”

Well, America is now more like Europe when it comes to unemployment.  But not when it comes to social benefits and protections.  The American Left knows how to import Europe’s failures, but not its successes.

The massive health-care bill passed by the House on Saturday is a classic example.  It would expand health care coverage somewhat, but not to European levels, and it would vastly increase the costs of our health care system, rather than reducing it to European levels.   It would also increase taxes to “European levels of taxation.”  The health care bill contains politically-correct provisions that Europeans would never put up with, like pork for trial lawyers and racial preferences.  And restrictions on national competition in health insurance, which do not exist in Europe.

In France, doctors don’t need to be paid as much, because competing professions, like lawyers, are paid less.  French law is much more conservative than American law when it comes to lawsuits, including lawsuits against doctors.  There are NO punitive damages, and France discourages lawsuits by making unsuccessful plaintiffs pay the other side’s legal bills.  (Other European countries have specialized health courts, rather than American-style jury trials, to cut lawyers’ bills, speedily compensate the injured, and prevent American-style baseless lawsuits against doctors.)  There are no racial preferences — even my Marxist father-in-law, a French trade unionist who likes Michael Moore’s book Stupid White Men, thinks that racial preferences are evil.  French people do not let political correctness shackle their minds the way American leftists do.

Europe is not as far to the left of America as people think, and America’s business climate is already not much more favorable than Europe’s.  For every three ways in which Europe is more socialistic than America, there are two ways in which it is less socialistic than America.  The Obama administration is getting rid of our advantages, but not our disadvantages.

American tort law and family law are much more burdensome, anti-business, and bent on redistribution of wealth, than Europe’s.

Confronted with the specter of new burdens under the health-care bills and global-warming bills backed by the Obama administration, many businesses with the money to do so are afraid to hire people and create jobs lest they be stuck with a large tab for things like health care benefits for newly-hired, less-skilled employees.

The Congressional Budget Office has repeatedly admitted that Obama’s stimulus package will shrink the economy “in the long run.”  It contained welfare and repealed welfare reform.  Unemployment is higher now than if Congress had voted it down.

After President Obama signs the controversial stimulus plan, which will add on average $8 per week to most paychecks, his administration will have to cross their fingers hoping Americans will spend it all, as they normally tend to do.

According to the Wall Street Journal article Plan Tries Slow, Steady Stimulus to Revive Spending the idea is to let money trickle out to consumers so it feels like a permanent income boost.  When the government sent lump-sum checks for the 2001 and 2008 stimulus packages, Americans stashed most of the cash in savings or paid off debt.  Neither of those actions fulfills the goals of a stimulus intended to offset weak consumer spending.

Coincidentally, last week, I had a brief conversation with “Sarah”, our office building concierge, and discussed how we spend our coffee shop gift certificates.  While I told her I’m very conservative in buying one cup of coffee at the time, she says she spends the entire card quickly buying all types of elaborated beverages, because she feels “it’s free money.”  Thus, the Obama administration is hoping for more Sarahs and less Silvias in the economy to make their plan work.

It is true.  One of the biggest components of the country’s GDP is consumer spending, but part of the current financial debacle is precisely caused by irresponsible spending from some American families who purchased homes for $500,000 despite joint incomes of $40,000.  So, I’d be cautious in trusting the spending factor to boost the economy.  I liked Obama’s original $1 trillion infrastructure plan, which was going to create jobs at home instead of overseas, where the clothing that Americans buy is made – especially from China.  At the time this infrastructure-heavy plan was discussed, mining analysts told me that a boon for U.S. jobs would certainly be a consequence.

Nonetheless, this spending experiment is being launched in the midst of a crisis, with the highest level of unemployment rate of 7.6% in January, 2.7 points more than a year earlier, the largest annual increase rate since 1975, plus fears that the economy will worsen before it gets better, as President Obama himself previously stated.

The current plan focuses heavily on social spending benefiting the unemployed, which will only revitalize the underground or cash economy.  Unlike the original plan, which stressed more infrastructure investment, this new plan deviates from spending that could have a clear income multiplying effect and instead invests in nonproductive sectors of the economy.  And it counts too much on Americans spending their extra money, since some will save more.