[Yes, Mitt, Vacations Are the Answer, But Not to the
Question You Think . . .

	"I'm delighted to be able to take a vacation
	with my family. I hope that more Americans are
	able to take vacations, and if I'm president of
	the United States I'm going to work very hard to
	make sure we have good jobs for all Americans
	who want good jobs, and as part of a good job
	the capacity to take a vacation now and then
	with their loved ones."
	
	Mitt Romney - July 6, 2012
	
- moderator]

Why Americans Should Work Less - The Way Germans Do

There is a solution to unemployment: if we worked the
same shorter hours as Germany, we'd eliminate 
joblessness overnight

Dean Baker	
The Guardian
3 July 2012
http://www.guardian.co.uk/commentisfree/2012/jul/03/why-americans-should-work-less-way-germans-do?

Nobel Laureate Paul Krugman and Richard Layard, a
distinguished British economist, took the lead last week
in drafting a sign-on "Manifesto for Economic Common
Sense", condemning the turn toward austerity in many
countries. This manifesto seems destined to garner tens
or even hundreds of thousands of signatures, including
mine.

While the basic logic of the manifesto is solid, there
is an important aspect to the argument that is
overlooked. We can deal with unemployment every bit as
effectively by having people work fewer hours, as we can
by increasing demand.

The most important point to realize is that the problem
facing wealthy countries at the moment is not that we
are poor, as the stern proponents of austerity insist.
The problem is that we are wealthy. We have tens of
millions of people unemployed precisely because we can
meet current demand without needing their labor.

This was the incredible absurdity of the misery that we
and other countries endured during the Great Depression,
and which Keynes sought to explain in The General
Theory. The world did not suddenly turn poor in 1929,
following the collapse of the stock market. Our workers
had the ability to produce just as many goods and
services the day after the collapse as the day before;
the problem was that after the crash, there was a lack
of demand for these goods and services.

The result of this lack of demand was a decade of
double-digit unemployment in the United States. The
spending programs of the New Deal helped to alleviate
the impact of the downturn, but because of the deficit
hawks of that era, Roosevelt never could spend enough to
bring the economy back to full employment - at least
until the second world war made deficits irrelevant.

This is the same story we face today. The US and
European economies were close to full employment in 2007
due to demand created by housing bubbles in the United
States and across much of Europe. These bubbles then
burst, substantially reducing demand. As Krugman and
Layard point out in their statement, one remedy for this
loss of demand is for government to fill the gap. If the
private sector is not prepared to spend enough to bring
the economy to full employment, then the government can
engage in deficit spending to make up the shortfall.

But there is another dimension to this issue. It's great
for the government to generate demand insofar as it can
productively employ people. This means either providing
immediate services, like healthcare and education, or in
investing in areas that will provide future dividends,
such as modernizing the infrastructure or retrofitting
buildings to increase their energy efficiency.

However, it can also employ people by encouraging
employers to divide work among more workers. There is
nothing natural about the length of the average work
week or work year and there are, in fact, large
variations across countries. The average worker in
Germany and the Netherlands puts in 20% fewer hours in a
year than the average worker in the United States. This
means that if the US adopted Germany's work patterns
tomorrow, it would immediately eliminate unemployment.

Of course, it is unrealistic to imagine such large
changes occurring overnight, but governments can
certainly attempt to encourage employers to shorten
workweeks and increase vacation and other paid time-off.
In fact, this is the real secret of Germany's post-
crisis recovery. Germany's growth has been no better
than growth in the United States since the start of the
downturn, yet its unemployment rate has fallen by 2.0
percentage points - while unemployment in the United
States has risen by almost 4.0 percentage points. The
difference is that Germany encourages firms to reduce
work hours rather than lay off workers.

Since workers in the United States put in the most
hours, the US has the greatest potential gains from
shortening work years. But all countries could try to go
this path. In the short term, this route keeps people
employed and allows them more time to enjoy with their
family and friends. Ideally, most of the lost wages will
be made up by subsidies from the government. (Remember,
the problem is too little demand, not too much. We can
afford this.)

In the longer term, workers may find that they prefer
more leisure and may be willing to sacrifice some income
to have a shorter work week, paid vacation or family
leave, or other paid time-off. If that ended up being
the case, it would be a lasting benefit from using
short-time working as a route for dealing with the
downturn.

But even if there are no long-run changes in work
patterns, shorter work hours should be on everyone's
list as a mechanism to combat unemployment. It is a
proven success story with real benefits for workers and
the economy.

___________________________________________

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