Wednesday, April 23, 2008

More Disgruntlement

Count another disgruntled deputy of the Right who has decided that this is as good a time as any to settle scores. Pierre Lellouche's post-election remark about Sarkozy's ouverture and the consequent need for vaseline has not been forgotten. Lellouche evidently believes that he may at last get the portfolio he covets by throwing the ministers who were shoved up his cul back in the president's frimousse.

I'm not sure that this is a wise strategy. In any case, the lack of, shall we say, diplomacy in Lellouche's graceless comments suggests that he would not be a good choice for the Quai d'Orsay.

Unemployment

At VoxEU, Tito Boeri takes note of improvements in the European employment picture. He attributes the decreased unemployment, increased employment rate, decrease in long-term unemployment, etc., to labor-market reforms that have reduced the cost to firms of dismissal and therefore encouraged hiring on new short-term contracts. Yet he also observes a paradoxical result of these changes: the governments that instituted them lost elections because, he argues, more precarious employment was not greeted by voters as a net improvement in their situation.

Oddly, however, Boeri doesn't discuss the case of France, where the employment picture has also improved but which has not by and large made the kinds of labor-market reforms that he credits with the improvement elsewhere. This raises two questions: first, is it correct to attribute all or must of the improved European employment picture to labor-market reform? If so, how does one explain the improvement in France? Second, France has begun to take tentative steps toward the kind of labor-contract revisions that Boeri thinks are an important ingredient in the improved employment picture. Will the French government that has pushed for these reforms--namely, Sarkozy's--suffer the same fate as the governments about which Boeri writes?

My hunch--and it is only a hunch--is that Boeri imputes too much of the improvement to labor-market reform and neglects other important factors such as productivity increases due to organizational changes and technological improvements (e.g., Europe has been slower to adapt to the information revolution than the U.S., but the benefits of belated adaptation are beginning to make themselves felt).