March 14, 2018
Many economists, including those at the I.M.F., have concluded that the austerity policies imposed on the euro zone by Germany cost millions of jobs and trillions of dollars of output over the last decade. But the NYT dismisses this assessment and tells readers that policies moving away from austerity, “could undo economic boom.”
The piece tells readers that reducing restrictions on firing across the eurozone was a major factor in lowering unemployment:
“He also pushed those countries to emulate Germany’s reforms, in particular relaxing restrictions on hiring and firing. Many countries complied, at least to a degree, helping joblessness in the eurozone fall to 8.6 percent in February, down from more than 12 percent in 2013.”
This contradicts much research which finds that restriction on firings have no effect on employment and unemployment. The more likely explanation is that the euro zone eventually did recover from the 2008–2009 recession, in part because the European Central Bank did its best to work around the austerity being imposed by Germany through fiscal policy.
The one cited source for the piece’s conclusion on labor market dynamics is Holger Schmieding, chief economist of Berenberg, a German bank, although the piece does tell us:
“Surveys of business optimism have slipped in recent months after four years of nearly uninterrupted gains. Such pessimism can become self-fulfilling, discouraging businesses from expanding and hiring.”
So, the NYT is unhappy that German workers may have more job security and get back some of their share of economic output. That’s fine, but maybe they should confine these views to the opinion pages.
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