Western Economies
Economic growth in Western economies will continue to be crippled by the resistance of “extractive elites,” argues The Economist, which are:
- The banking sector, with its enormous lobbying power. “Much of current economic policy seems to be driven by the need to prop up banks, whether it is record-low interest rates… or the recent provision of virtually unlimited liquidity.”
- The public sector, where jobs and generous benefits are funded by taxes on the rest. Employees in the UK’s public sector, for example, continue to do much better than those doing similar work with the same skill levels in the private sector. Public-sector workers get 8 per cent higher pay, plus much greater job security and pensions.
Another point made by The Economist is that “a high level of public-sector employment reduces the extent to which creative destruction occurs and new industries develop. Workers may prefer the security of government jobs to the riskiness of joining new businesses.”
And, “as European governments are discovering, public-sector unions are often the most vocal in opposing the kind of labour-market reforms needed to reduce structural unemployment.”
