O Intermitente<br> (So long, farewell, auf weidersehen, good-bye)

O Intermitente
(So long, farewell, auf weidersehen, good-bye)

quinta-feira, dezembro 09, 2004

The Seen and the Unseen:On the Economics of Protecting Employment

Mais um excelente artigo de Anthony de Jasay na Library of Economics and Liberty.

Today, in Germany and France, divorcing your spouse is easier, and in most cases cheaper, than dismissing an employee under due observance of the provisions of the contract of employment. The administrative hurdles can be a long nightmare. Court approval may be required and failing it, the employees in question must be reinstated. The labor union representing a majority of the employees must agree to the "social plan" by which the employer company undertakes to assist the employees who lose their jobs. (...)

Lately, a French draft bill, redefining the conditions under which job cuts could be permitted, included the "safeguarding of competitiveness" as one of the grounds for authorising such cuts. The CGT cracked the whip, President Chirac heard the crack, Mr. Raffarin the premier heard that Mr. Chirac has heard it, and the provision about competitiveness was tactfully scrapped.

It is too obvious for words that when firing is very difficult, very expensive and takes long to accomplish even if it is eventually allowed, hiring will look a much more dubious proposition than it would otherwise do. The potential employer will think twice before creating a new job or filling one that falls vacant by natural wastage. Having thought twice, his third thought is quite likely to be not to hire.


The peoples of East and South Africa suffer heavily from AIDS, but are reluctant to talk about it. They prefer to regard it as a malevolent act of Nature, rather than to admit that its spread had something to do with their own free and easy practices. The "political classes", if not the peoples, of Continental Europe display much the same attitude in the face of endemic unemployment. It is a malevolent circumstance beyond their control. The social regime they have put in place is not responsible for its spread. In no way is it the consequence of the "European Model", which is blameless in the matter. They will readily praise the European Model for its purported humane dispositions, including its concern for protecting employment, but will not admit that the spread of unemployment owed anything to these concerns. Much of this is just fake innocence and whistling in the dark, for it is impossible honestly to believe that chronic unemployment is in no way the "model's" fault.

Behind the fake innocence, a powerful political mechanism is at work, forcing attention to be confined to "what can be seen"?a mechanism that Bastiat in the 1840s did not account for, because in his time it did not yet exist. It developed after World War II along with the rise of the Welfare State and its systematic study was left to the "public choice" branch of economics to undertake from the 1970s onwards. Job protection is an instructive case study.

"Blocking the exit" in a country of the size of Germany or France may well abort each year 200,000 or more jobs that would have been created. A company trying to cut 200 jobs at its plant in a smallish provincial town will set off 200 furious and desperate screams insisting on protection. The despair and fury are perfectly understandable. They could hardly be mitigated by telling the protesters that overall job protection will cost the country as a whole 200,000 jobs. The local screams will be transmitted to the capital, and multiplied in volume, by the labor unions and the news media, frightening the wits out of a government worried about its score in the polls and the next election. It takes more self-confidence and "long-termism" than most governments possess, to rise above such worries.

Once the state has moved into the economic sphere and taken responsibility for propping up the wellbeing of its citizens with the money it takes from them, it can hardly stop them running to it for help when their wellbeing needs propping up. The process, of course, becomes cumulative, for "what is not seen" must systematically be sacrificed for the sake of "what is seen". Bastiat's great discovery, opportunity cost, that evaluates a chosen alternative against the forgone alternative that could have been chosen in its place, must then lose its edge.

Nota: Segundo a notícia de ontem d'A Capital (numa parte que não estava online) uma das condições que o BE colocou para o apoiar o PS na AR seria um pacto de "defesa do emprego". Ciente das suas "obrigações sociais" e com a sua usual irresponsabiluidade em matérias económicas acredito que os socialistas a aceitaram sem objecções.

posted by Miguel Noronha 6:07 da tarde

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"A society that does not recognize that each individual has values of his own which he is entitled to follow can have no respect for the dignity of the individual and cannot really know freedom."

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