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Don,

You need to do a bit more reading about some of the nations you listed as doing well. You might be surprised at what you find. I realize the rage in euroland right now is to look at them for guidance.

And just an aside, Georgia is doing a lot better than the US economy as a whole. We have about 8.4 million people, which is actually almost 3 million more people than Finland has.

I would think Luxenbourg is doing well too. Why not list them but I would then compare them to Atlanta.

Oh, scale has no meaning at all, I realize.

Joe,

I think much depends upon whom you compare the nations to. Sweden is an almost unique case in that it historically has run a true Keynesian macroeconomic policy. What this means is that it runs enormous budget deficits in recession and equally large surpluses during boom times. This means that in the course of a given business cycle Sweden will appear as an incredible success or a howling disaster depending upon when you measure.

I'm aware of the fad in euroland to use Sweden as a model - but it's not going to work. The unique thing about Sweden, Norway, Finland, and to a lesser part Denmark is the degree to which thay have managed to depoliticize economic decisions of all kinds. Anyone who believes that French farmers, German factory workers, and Italian train drivers will allow that to happen had best think again.....

I agree that scale has meaning - as does culture. I've worked with a few scandahuvians - and believe me the culture - the very way they think of workplace issues - is radically different than almost any other culture I can compare them with.

Via Marginal Revolution:

http://www.digitalnpq.org/archive/2006_winter/friedman.html

Free Markets and the End of History

Milton Friedman, 93, was awarded the Nobel Prize for Economics in 1976.

NPQ | The so-called “old Europe” of France, Germany and Italy has been stagnating with high levels of unemployment. Germany—one of the last bastions of the Cold War Keynesian welfare state—now has a conservative leader, Angela Merkel.

What should be done to get Germany, and by extension old Europe, back on track?

Friedman | They all ought to imitate Margaret Thatcher and Ronald Reagan; free markets in short.

Germany’s problem, in part, is that it went into the euro at the wrong exchange rate that overvalued the deutsche mark. So you have a situation in the eurozone where Ireland has inflation and rapid expansion while Germany and France have stalled and had the difficulties of adjusting.

The euro is going to be a big source of problems, not a source of help. The euro has no precedent. To the best of my knowledge, there has never been a monetary union, putting out a fiat currency, composed of independent states.

There have been unions based on gold or silver, but not on fiat money—money tempted to inflate—put out by politically independent entities.

At the moment, of course, Germany cannot get out of the euro. What it has to do, therefore, is make the economy more flexible—to eliminate the restrictions on prices, on wages and on employment; in short, the regulations that keep 10 percent of the German workforce unemployed. This is far more urgent than it would otherwise be if Germany were not in the euro.....

Don,

Just a couple of asides on Norway, Finland and Sweden.

These nations are rich in natural resources. They also have not become part of the euro giving them more control of their monetary policy.

Equally if you do some more digging you will find they are not quite what they appear to be. There are some very good studies on the economies of these particular nations which challenge what is believed.

Joe,

Norway, Finland, and Sweden are rich in natural resources. So are the US, Canada, Australia, Russia, Kuwait, and Saudi Arabia. Even Holland had harge petrochemical reserves at one point. Management is important. Perhaps even more important is not to allow 'free' money to take over your economy and system of government. Natural resources should be (at best) a nice bonus. Not the way you really earn your bread.

I think you can find studies on both sides of the question. You can of course find similar studies 'showing' that the US is living on borrowed time and are a bunch of lemmings about to go over the cliff.

Milton Friedman gave a recent interview which touched on the Scandanavian countries which I think is good sense:

NPQ Perhaps the Scandinavian countries are a model to look at. They are high-tax but also high-employment societies. And they have freed up their labor markets much more than in Italy, France or Germany.

Friedman Though it is not as true now as it used to be with the influx of immigration, the Scandinavian countries have a very small, homogeneous population. That enables them to get away with a good deal they couldn’t otherwise get away with.

What works for Sweden wouldn’t work for France or Germany or Italy. In a small state, you can reach outside for many of your activities. In a homogeneous culture, they are willing to pay higher taxes in order to achieve commonly held goals. But “common goals” are much harder to come by in larger, more heterogeneous populations.

The great virtue of a free market is that it enables people who hate each other, or who are from vastly different religious or ethnic backgrounds, to cooperate economically. Government intervention can’t do that. Politics exacerbates and magnifies differences.


http://www.digitalnpq.org/archive/2006_winter/friedman.html

joe,

I'm tempted to apologize for being pedantic, but then again I think I'll just confront you with a fact.

Finland has been part of the Euro zone since Day 1.

Maybe you meant Denmark. Except for the natural resources.

I'm sure the studies you cite are robust, however.

Cheers,

Rofe,

Thanks for pointing out my mistake.

You are so correct about Finland. I realized that as soon as I hit the post button.

One think tank which has done a lot of work on the Nordic model is Timbro. I do not think anyone finds fault with their work other than they do not like the results.

There really do not seem to be a lot of answers there or at least I would not think for Germany. It is like some who think Austria might be a model to follow but Austria is almost a subset of Germany.

Again too you are dealing with scale. In the case scale works against Germany and not in it favor.


That we agree on, joe. As I have written several times, the 'nordic model' won't work in Germany, France, or Italy. There is some reason to think it works in the Scandanavian countries to some degree. Or at least did.

@Rolf

Nor would Ireland be considered adversely effected by it's entry into the EMU. However, growth in this country is strongly due to:

1) Massive infrastructure investment by the EU
2) High standard of education and hence
3) Foreign direct investment coming from the US/Canada/UK
4) Changes in Irish tax laws to entice #3
5) Fluid workforce

It has been said that it is easier to get a camel through the eye of a needle than to reform the German economy.

Via Bros. Judd:

GERMAN BRAIN DRAIN

Sick of Bad Pay, Doctors Flee Germany

By Udo Ludwig

German doctors are packing their scalpels and seeking their fortunes abroad, lured by the prospect of far higher pay and driven away by stifling bureaucracy in their country's health service.

http://service.spiegel.de/cache/international/0,1518,399537,00.html

@Don: Clinton didn't have a rural Arkansas accent, though I'm sure he could and did fake one as needed. He grew up in Hot Springs and spent years in places like Georgetown, Oxford, and New Haven polishing his accent and behavior. Bush never did. I'm not criticizing Bush for that as I believe there are qualities far more important than polish for a US president. Nevertheless Clinton's polish did help him to be a more effective President than he otherwise might of been, and I recognize that.

And this is something I take issue with. Yes, I agree that Europe often mistakes accent for something that actually matters. However, what Clinton had was glibness, something he shares with many a used car salesman. That isn't necessarily a good thing.

I think Europeans have difficulty understanding that in the US, we often find Bush's tendency to twist words and mix metaphores as an endearing trait after eight years of Clinton's "nuance" and glibness.

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