Friday, November 13, 2009

Sen, Stiglitz, Fitoussi, Hall, Lamont

There will be no blogging this afternoon because I will be attending a conference at Harvard. The session will bring together Amartya Sen and Jean-Paul Fitoussi, two of the three prime movers behind the Sarkozy-inspired initiative to invent new measures of social success (the practical translation of Henri Guaino's idea of the state as the shaper of "civilization"). They will be joined by Peter Hall and Michèle Lamont, the editors of a recent volume in which a number of scholars ponder the question of how to measure social progress. Readers in the Boston area might find this event interesting. It is open to the public. Details here.

Kurzarbeit

I was asking the other day about Germany's relative success in keeping unemployment low despite a substantial GDP hit in the crisis. I wasn't the only one who noticed. Paul Krugman today recommends that the US consider a German-style Kurzarbeit program: government subsidies to employers for keeping workers on at reduced time rather than proceeding to layoffs.

How quickly times have changed. Krugman actually defends (against Larry Summers) work-sharing programs in all their forms. That would include France's 35-hr. week. During the presidential campaign, Sarkozy ridiculed the idea that sharing the available demand for labor among more workers accomplishes anything, and Krugman concedes that "in ordinary times" such programs are generally considered to be a drag on long-term growth. But these are not ordinary times, he says.

Economists, who know the meaning of ceteris paribus, have no difficulty shifting positions when the parameters of a situation change. But politicians who draw upon economists for campaign themes tend to become wedded to their commitments, because they use them to draw lines in the sand: on the other side, where my opponent stands, lies madness. Changing one's mind is derided as "flip-flopping" (cf. Keynes: "When the facts change, I change my mind. What do you do, sir?"). But the proper balance to be struck depends on a careful analysis of local conditions. France has had long and not altogether happy experience with subsidized employment as well as shortened working hours. Other active labor market measures might be better adapted to present conditions. Earlier in Sarkozy's administration there was talk of increased funding for worker retraining coupled with enhanced job search assistance, in emulation of Scandinavian flexicurity schemes. We haven't heard much about this lately, perhaps because the unions showed little enthusiasm for the idea.