On Economic Mobility

Richard Posner critiques Krugman's latest apologia for the French lifestyle:

Krugman's failure to relate the European model to Europe's Muslim problem is telling. To point to the upside of Europe's social model without mentioning the most serious downside is to provide bad advice to our own policymakers. The assimilation of immigrants by the United States, compared to the inability of the European nations to assimilate them--with potentially catastrophic results for those nations--is not unrelated to the differences between economic regulation in the United States and Europe. Because the U.S. does not have a generous safety net--because it is still a nation in which the risk of economic failure is significant--it tends to attract immigrants who have values conducive to upward economic mobility, including a willingness to conform to the customs and attitudes of their new country.

Social mobility implies the opportunity to fail. If society protects jobs, the employment opportunities of ambitious newcomers are reduced and they may end up at the embittered margin of society. Thus, it is not poverty that breeds extremism; it is social policies intended in part to eradicate poverty that do so, by obstructing exit from minority subcultures. If Muslims in European societies do not feel a part of those societies because public policy does not enable them to compete for the jobs held by non-Muslims--if instead, excluded from identifying with the culture of the nation in which they reside they perforce identify with the worldwide Muslim culture--some of them are bound to adopt the extremist views that are common in that culture. The resulting danger to Europe and to the world is not offset by long vacations.

Becker's response is also worth reading:

Krugman's recent New York Times article on French "family values" cited by Posner is the latest of many attempts during the past decade to justify, high labor taxes, restrictions on the ability of companies to shed employees, a French law that restricts work to no more than 35 hours per week, and various other restrictive labor-market legislation in continental countries. They supposedly lead to more civilized goals than are obtained in the freer Anglo-Saxon markets. That this leads to very high unemployment rates and limited job opportunities, especially for immigrants and young low skilled native-born men and women, and a shortage of part-time work for mothers and others, is the price that apparently has to be paid for these advantages.

But are any advantages of this system worth such a high price? Clearly, the European system of employment helps the "insiders" with good jobs, and works against "immigrants" and other newcomers ,or "outsiders" in labor markets. It is claimed that the European system promotes "family values" over individualistic ones. Yet the data do not support this contention since marriage rates are lower in Europe than in America, and not a single European country has birth rates that are high enough to maintain their populations without continued immigration.