Economic Myths Part 3
Thursday, March 5, 2009 3:26Continued from Economic Myths Part1 and Economic Myths Part 2
But as my profound and well informed critic decided to make an unfavourable comparison between the US and Germany let’s look at some other facts. Unemployment stands at 9.4 per cent in Germany against 4.9 per cent in the US — even though the US is in recession*. This unemployment rate, given the current economic situation, is a tribute to America’s flexible labour markets. Per capita GDP in 2000, adjusted for purchasing power parity, was $US23,400 for Germany but $36,200 for the US.
Of course, per capita GDP figures can be deceiving with per capita consumption of goods and services being a far better measure of living standards. Using this measure America still led France, Belgium, Denmark, Italy, Holland, Spain, Sweden, Switzerland, Japan, UK — and Germany. A few examples should ram the point home: 53 per cent of American households had dishwashers against 34 per cent for Germany; for VCRs it was 83 per cent to 42 per cent, for microwave ovens it was 86 per cent to 36 per cent. American households led in every category. Looking at it in term of goods per 100 people we find that America led German for cars 57 to 49; for phones it was 63 to 49. For cell phones it was 128 per 1000 persons against 42.8, for TVs it was 776 against 550.
It would be pointlessly repetitive to continue in this vein. Whichever way one looks at the economic picture, American incomes have not been falling. That’s not to suggest that all is rosy. I have severe reservations about the future, believing that America will enter serious economic waters unless a healthy savings rate is restored. But that is not what my anonymous critic was about.
*It needs to be said that this unemployment figure does not include those who dropped out of the work force because they couldn’t find jobs. However, exactly the same can be said for Germany’s official unemployment rate.
In Part I mainly dealt with the myth that American living standards have been falling for than 20 years. I shall now deal with my anonymous critic’s fallacies and myths concerning jobs, productivity, capital and depressions. Naturally, it goes without saying that none of these subjects can be given the attention they deserve in a short article. They can, however, be dealt with to the extent of demolishing common misconceptions.
My anonymous critic argues that it’s “…the same old nonsense that productivity will create an increasing standard of living,” completely oblivious to the fact that working hours in themselves tell us nothing about productivity. (Readers will recall that I dealt with American working hours in Part I).
Continued in Economic Myths Part 4.
