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February 07, 2006

Some disagreement over unemployment

We're at that point in every big project where it's on the mind. It's not entirely clear whether it's just my paranoia, or whether it's good intuition, but I worry about getting forcefully added to the ranks of the unemployed.

So in this frame of mind I noticed with amusement the BBC News article about French protests against the Prime Minister's CPE (contrat premier emploi) idea. The plan is to enact a law prolonging the trial period for young employees to two years, meaning essentially that instead of a 1-3 month trial period during which the employer can get rid of the employee without justification, the employer can get rid of the employee any time in the first 24 months without justification.

Since work contracts are entered into freely by both parties and neither party has an advantage in the negotiations, especially in France where unemployment of young people runs about 20%, employers welcome the proposition as a great way to combat unemployment.

According to a report I heard on the radio here, 52% of French voters surveyed think the law is not a good idea. That didn't show up in the BBC News article. Instead the BBC says this, which is total horseshit:

French Prime Minister Dominique de Villepin has made it a priority to cut unemployment among young people.

Politicians, like managers and other people in favorable positions, prefer to be judged by their intentions, rather than their actions. Wouldn't you? Isn't that a damn good reason to turn the sound off and judge them purely by what they in fact accomplish, the part that could never be attributed to brownian motion, business cycles, or accident?

By the way, unlike the Fed, the European Central Bank is not legally concerned with limiting unemployment. According to the Federal Reserve Act, the Fed's monetary policy objectives are set up "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." (Emphasis added.)

Posted by Mark at February 7, 2006 09:08 PM

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Comments

AT least if you get added to the ranks of the unemployed your have a large amount of savings/investments to use as a cushion for a period of time that should be more than sufficient to get a new job.
Mom

Posted by: Teena at February 9, 2006 04:22 PM

Things could be worse. Yet the mere fact that things could be even worse than they currently are does not mean all is well.

I've been saving money according to a spreadsheet I made. The goal of that spreadsheet was to determine how much we'd need at real growth rates of 3-7% annually to provide for Nathalie and I, given that the costs of retirement could be expected to be borne privately by the time I'll be eligible for retirement, and given that Nathalie would probably not be a primary earner.

The reasons I do not count on public retirement money are:

  • Demographics show us aging, meaning the cost of retirement will be progressively heavier

  • Since the end of the postwar boom period of approx 1950-1970, economic gains have gone primarily to those with capital, and I see that trend increasing, rather than decreasing; this means those left working will have increasing difficulty shouldering the burden

  • Political trends, in particular globalization for capital but not for people, mean that democratic possibilities for change are essentially going to continue to diminish, which in turn means the gains will accrue even more effetively to the top of the heap, shutting out an ever greater portion of the rest of us

On suggestions from my father and brother, I'm mostly invested in US equities. In the last three years, the growth rate in existing savings has plateaued. (Before that, but after the bubble, the growth rate was negative.) My father, and before him my grandfather, too, added money I couldn't save because my salary had mostly plateaued, especially relative to inflation. So the overall growth in savings has kept pace with what I have in the spreadsheet, even as the growth rate has been worse than I ever anticipated.

So yes, I could live on that, and let it get wiped out... with 30 years left to work before I officially get retirement, with employers in the sector where I have experience outsourcing more and more, and with the need to move from this house, because there are no comparable jobs in my area. I guess there's nothing at all to worry about.

Posted by: Mark at February 9, 2006 08:13 PM