Daily Archives: February 4, 2014

By Toby Luckhurst

  • The middle class customer base is shrinking in the US, as the top 5 per cent of earners drives consumption.
  • Women have discovered an entrepreneurial streak in Spain in the face of high unemployment and a sluggish economic recovery.
  • Sarah Carr writes on the Egyptian military’s efforts to stifle dissenting voices in the wake of the coup against Mohamed Morsi.
  • US productivity is suffering in the wake of the global recession, to such an extent that Silicon Valley-based Blueseed plans to launch a cruise ship into international waters to allow immigrants to start new businesses without seeking residency.
  • Norwegians praise Iraqi Farouk Al-Kasim for creating their “oil fund”, one of the largest sovereign wealth funds in the world, and avoiding the resource curse.
  • Scarlett Johansson’s decision to side with SodaStream in the West Bank controversy foreshadows Israel’s own need to decide on the future of its settlements on the occupied land.

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Tony Barber

Ask a German politician or pundit to account for the strength of Germany’s economy. I’ll bet you a plate of Nürnberger sausages that he or she will praise the labour market and welfare reforms adopted about 10 years ago by the government of Gerhard Schröder, Chancellor Angela Merkel’s predecessor.

The “Hartz reforms” tightened the terms on which unemployed Germans claim welfare benefits. They laid the emphasis on putting people quickly back into jobs, at lower pay if necessary. Nowadays German unemployment is remarkably low (5.1 per cent of the workforce in December 2013, according to Eurostat, versus 27.8 per cent in Greece, 25.8 per cent in Spain and 12.7 per cent in Italy).

However, some newly published research by four German economists challenges the argument that the Hartz reforms are the main cause of the nation’s economic recovery. Their carefully written study, entitled “From Sick Man of Europe to Economic Superstar: Germany’s Resurgent Economy”, should be required reading for everyone concerned with boosting the eurozone’s economic performance. Read more

By Gideon Rachman
In 1996 a friend of mine called Jim Rohwer published a book called Asia Rising. A few months later, Asia crashed. The financial crisis of 1997 made my colleague’s book look foolish. I thought of Jim Rohwer (who died prematurely in 2001) last week as a I listened to another Jim – Jim O’Neill, formerly of Goldman Sachs – defending his bullish views on emerging markets in a radio interview.