Wednesday, January 25, 2012

Unemployment in an age without memory

We all know the story, Germany's economy has managed to play everything right while the UK and other 'information age economies' messed everything up.  Germany is the model the United Kingdom needs to follow.

Certainly the last couple of years would indicate this.  German unemployment has been amazing while the UK unemployment continues to rise.

But take a view of about 20 years and the story looks very different.  In 1995 UK unemployment went under German unemployment and stayed their for the better part of 15 years.  Today it is common among conservatives to call this a bubble, but the longer term trend shows more stability in the UK employment market than the German.

Certainly re-unification has been a major problem for Germany.  But what ever the causes UK unemployment has shown far more stability than Germany, and even after the 2008 collapse the UK rise was far less dramatic than repeated German rises in the 1990s (a lost decade for Germany) and massive rises between 2002 and 2006.  Only over the pas t5 years has German unemployment been coming down, but even in this it shows the radical swings that have plagued the economy for decades.

Certainly the United Kingdom needs to reflect upon its economic policies, current austerity alone is proving to not be a solution at all.  But the German model is not only not valid for a nation that whipped out most of its industrial base years ago, but given Germany wild ride on unemployment over the past 20 years would probably not be wise.

I note also that British society and community is not as strong as German.  If the UK entered the kind of up and down insanity of unemployment as is normal for Germany you would likely see more social problem than you do in Germany.  This social element is sadly missed.  Morally the economy only exists to serve the society, but that ideas has been turned around in the minds of modern European leaders, where society must be transformed to serve the economy.

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