The View: Japanisation & Europe

  • Japan’s root problems: mismanagement of product strategy …
  • And a docile labour force too willing to ‘pay’ by accepting wage cuts
  • The spread of ‘Japanisation’ to the US is therefore inconceivable
  • Europe has the symptoms: slow growth, deflation threat, negative rates
  • But in the EA, slower growth has resulted from the euro structure
  • Products are competitive and labour forces do not accept wage cuts
  • Divergence of German and Italian labour costs is especially acute
  • Over time, the chief reason has become falling Italian productivity
  • ECB interest rates are negative to protect uncompetitive Italy
  • Germany has become indefinitely undervalued in labour costs
  • Excessive budget austerity has made the whole EA export-dependent
  • Growth potential is slipping, as in Japan, but both may ‘muddle through’
  • Populism adds to EA vulnerability to accidents

Economics

Politics

05 Apr 2019

Russia: Labour fix

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