Thursday, May 7, 2009

The Pyhrric Continental Model.

The Economist assesses the durability of the colbertist triumphalism that has recently swept continental European countries (“A new pecking order”, May 7th). After reminding the reader that “Mr Sarkozy (who was) once the man who wanted to make Paris more like London now declares laissez-faire a broken system”, the London weekly pursues:

“The strengths that have made parts of continental Europe relatively resilient in recession could quickly emerge as weaknesses in a recovery. For there is a price to pay for more security and greater job protection: a slowness to adjust and innovate that means, in the long run, less growth. The rules against firing that stave off sharp rises in unemployment may mean that fewer jobs are created in new industries. Those generous welfare states that preserve people’s incomes tend to blunt incentives to take new work. That large state, which helps to sustain demand in hard times, becomes a drag on dynamic new firms when growth resumes. The latest forecasts are that the United States and Britain could rebound from recession faster than most of continental Europe.”

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