The unemployment rate dropped slightly in the U.S. which is of course a good thing. Check out the U.S. Bureau of Labour statistics for the latest numbers. However, there are still some very bad things happening in Europe around economic and labour relations policy which need to be discussed.
The New York Times has done its part by publishing an important article which discusses the latest trends in European labour and wages policy . The data is not pretty as it reveals a widespread campaign to eliminate collective bargaining rights and the unions that are essential to maintaining a decent standard of life for working people and a reasonable degree of income equality. Instead European economists and policy leaders and politicians are promoting these policies as a way to reduce both nominal and real wages. The approach which The Times calls the Americanization of the European labour markets is much more troubling than that. European policy specialists , neo-con economists and others wedded to anti-Keynesian theory are convinced that the solution to unemployment lies not with bolstering inadequate aggregate demand but rather with promoting a ruthless race to the bottom making countries’ with high unemployment more competitive by lowering their average real wage. This is precisely the argument that Keynes attacked in The General Theory namely that unemployment was voluntary due to the claim that the marginal disutility of work always equalled the utility of the wage. So if people were unemployed it was by choice. They simply had to lower their wage demands and they would find work . Keynes rejected this classical postulate. (See G.T. p.5) In framing the argument in this way classical economists in the 1930s were trying to deny what stared them and Keynes in the face. There were not enough jobs available to soak up the unemployed because of inadequate aggregate demand. Keynes and his circle understood this but the classicals did not. The European leadership is engaged in committing the same fundamental error.They are seeking to lower wages in the mistaken belief it will restore prosperity. They are wrong and repeating one of the terrible errors of the 1930s . It can only end badly.