Michael, Marty, et. al.
I have been researching and writing about the process of 'transition' in
Slovenia for the past decade and a half. After the short depression
occasioned by the breakup of Yugoslavia, (since 1993) Slovenia has had a
remarkably healthy growth rate (averaging around 4% plus in real terms)
in the decade since (last year it had the highest rate of economic
growth in Europe at 4.6%); it has unemployment well below the European
average (6.3 $ in 2004 versus 9% for Europe) and, as of the last year or
so, has achieved inflation rates comparable to most of the transitional
economies and to Europe generally (3.7% in 2004 compared to 2.1% for
Europe overall). Of course, the IMF and economists would say this was
a great success story, Right? Wrong. The IMF and the NC economists are
saying Slovenia is a great failure. Why? Because they haven't
introduced "labour market flexibility" and reduced Slovenian wages and
cut social benefits to the bone. They know this because unemployment
has remained low while Union strength has been maintained and labour
market regulation has continued as part of the 'social contract' between
the unions, employers and the government that regulates all economic
policy in Slovenia. (In other words, labour was not crushed and wages
decimated, therefore, the transition was a failure.)
The centrepiece of this nonsense is the claim that Slovenia has not
produced 'labour market flexibility' (despite the impressive
macro-economic results) and experienced no 'big bang'. Research by one
of my colleagues at the faculty of social science at the University of
Ljubljana has documented that employers -- in consultation and
negotiation with the unions -- have produced a form of flexibility that
has not only maintained employment and wages, but also allowed textile
and shoe producing firms to compete with low-wage Asian imports. The
problem is that this flexibility was produced by co-operation with the
unions and workers' councils and that is outside the ken of
neo-classical economists whose ideological blinkers are one of the
wonders of the modern world. It makes one ashamed to call oneself an
economist.
Paul Phillips
Professor Emeritus,
University of Manitoba
Professor of American Studies,
Faculty of Social Science, University of Ljubljana
Michael Perelman wrote:
Marty, your Korean story is fascinating. 55% in irregular employment. Where
in the
world is the good news. China is growing in the most perverse ways. Other
places
are stagnating. We already discussed the outsized US consumption today.
Usually, there is a miracle economy that looks to be the wave of the future.
Is it
China. I recall hearing Milton Friedman in a private conversation gloating
about
opening up China, whose excess employment would drive labor costs down
world-wide.
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