Living in a Globalised World lecture 4

1
Living in a Globalised Worldlecture 4

• George Irvin Pam Shaw
• www.george.irvin.com/sussex

2
This Session

• Are there alternative models of advanced
  capitalism or is US model best?
• How do EU and USA compare?
• Equality, prosperity, growth and employment?
• Is EU model too welfare heavy and
  uncompetitive? (ie, is budgetary stringency the
  only answer to globalisation?)

3
EU v USA Europes advantages

• EU-25 pop is 455m (USA 275m) and combined GDP is
  9.3 tr ( 9.0 USA)
• EU-15 runs CA surplus (v large US deficit)
  Germany worlds largest exporter
• EU-15 is a net capital exporter (creditor) USA
  is largest debtor
• EU-15 companies doing better 61 in Fortune 500 v
  USA 51
• EU-15 citizens enjoy better levels of education,
  excellent public services, job security, longer
  holiday entitlements, and better health care and
  retirement benefits more stringent environmental
  standards far lower rates of violent crime.

4
EU v USA equality

• Gini Coefficients (EU-15 USA)
• Sweden 1995 .221
• Finland 1995 .226
• Luxembourg 1994 .235
• Netherlands 1994 .253
• Belgium 1997 .255
• Denmark 1997 .257
• Germany 1994 .261
• Austria 1995 .277
• France 1994 .288
• Spain 1990 .303
• Ireland 1987 .328
• Italy 1995 .342
• UK 1995 .344
• Greece (CHER, 1999) .362
• Portugal (CHER, 1999) .375
• EU-15 average .288
•  
•  USA 1995 .372

5
Prosperity, Growth Productivity

• But US has done better
• Per capita Y (EU-15) 70 of USA27,535 for the
  EU-15 and 38,093 for the USA in 2003.
• over the past decade, US growth has been higher
  than that in the EU,
• average unemployment has been lower in USA.
  unemployment rts

6
Labour Productivity, Growth Unemployment

• However
• Productivity per hour per worker higher in
  Germany, France than USA, but USA works longer
  hours (USA 1800 pa v EU 1500 pa)
• Per capita growth difference very small
• Sooo Unemployment is the crucial problem!

7
Unemployment in EU Core Economies

• Competing views
• Minimum wages Inflexible labour markets OECD
  Jobs study (1994) US economists argue that high
  benefits remove incentive to be employed
• Inadequate aggregate demand
• Keynesian view more recent agreement that
  French German C-demand too low danger of
  deflation Britain US demand sustained by asset
  boom

8
Where From Here?

• Examine debates in the EU
• does globalisation mean the end of the welfare
  state?
• Is the euro an answer to globalisation?
• (with Pam Shaw) Look at the complex issues of
  environmental change and sustainable growth

9
Question

• Two groups (of your choice) should form to debate
  the motion
• High unemployment in the Eurozone is mainly
  caused by excessively generous welfare schemes
  and inflexible labour markets