The US Is Exporting Its Extreme Inequality Abroad

  • submit to reddit

In American lore, the United States is the City on the Hill, a beacon of freedom and democracy that sheds its light into every shadowy corner on Earth.

But according to a report last week by Eduardo Porter in The New York Times, there’s a darker side to US hegemony. The globalization of American business practices, writes Porter, is leading to increasing inequality and falling economic security for working people in Europe…

Spain has eased restrictions on collective layoffs and unfair dismissal, and softened limits on extending temporary work, allowing workers to be kept on fixed-term contracts for up to four years. Ireland and Portugal have frozen the minimum wage, while Greece has cut it by nearly a fourth. This is what is known in Europe as “internal devaluation.”

Tethered to the euro and thus unable to devalue their currency to help make their goods less expensive in export markets, many European countries — especially those along the Continent’s southern rim that have been hammered by the financial crisis — have been furiously dismantling workplace protections in a bid to reduce the cost of labor.

The rationale — forcefully articulated by the German government of Angela Merkel, the European Commission and somewhat less enthusiastically by the International Monetary Fund — is that this is the only strategy available to restore competitiveness, increase employment and recover solvency.

These policy moves are radically changing the nature of Europe’s society.

“The speed of change has certainly been very fast,” said Raymond Torres, the chief economist of the International Labor Organization in Geneva. “As far as I can tell, these are the most significant changes since World War II.”

Read the whole story here, and also see this Reuters report on the austerity-induced demise of the traditional Spanish siesta.

  • submit to reddit