Down and Out in Europe and the USA

Nice WSJ piece on the transatlantic divide in treatment of the unemployed:

In Germany, losing his factory job didn’t stop Alfred Butt from taking a Mediterranean vacation this winter. Thanks to generous jobless benefits, being out of work “hasn’t changed my life that much,” Mr. Butt says.

In the U.S., Dylan DeRoberts lost similar work — but there’s no seaside getaway for him. Instead, he’s giving up life’s little pleasures, like riding his snowmobile, because he lost his insurance, too. “I’ve learned to live at a new level,” Mr. DeRoberts says.

The great absurdity of the American system is that we tend to treat unemployment as a symptom of laziness as if someone who gets laid off could always just go move west and start up a Homestead Act farm. We know, however, that the nature of the modern business cycle is that events set in motion in 2008 have essentially guaranteed that a much larger proportion of the population will be jobless in 2009 than was jobless in 2007. For any given unemployed person, there will be a story you can tell about why he’s unemployed rather than someone else, but the existence of the unemployment as such has nothing to do with individuals’ failings.


The health insurance aspect is especially egregious. Not only will you lose your insurance, but if you have a “pre-existing condition” — or develop one while you’re unemployed — you can find yourself permanently locked out of affordable care for your ailment. I think the Germans probably go too far in terms of generous unemployment benefits, since too much spending in this regard can make labor market recoveries slower, but we could definitely stand to do more.