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The Mobi
The Mobi is Germany's mobility bonus, funding that covers moving, relocation and retraining costs for unemployed Germans seeking work anywhere in the world.
Plagued by high unemployment due to the turmoil of re-unification and rigid labour laws, Germany has been helping its skilled and less-skilled jobless workers match up with foreign employers searching for manpower.
The country has also been offering financial support to cover moving and transportation costs for the hordes of unemployed Germans in search of jobs across the European Union, and even as far away as Australia and Canada.
The mobility bonus strikes me as a move of desperation. The Germans have created a bloated welfare state and now they are paying people to get off the welfare rolls and get out. I wonder what Rawls would have said?
Even now, I see an opportunity for America:
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!
Posted by Alex Tabarrok on April 16, 2008 at 09:27 AM in Economics | Permalink
Comments
> The Germans have created a bloated welfare state and now they are paying people to get off the welfare rolls and get out.
Just like GM buys out employees from their pension obligations...I wonder if that will end up being offered in the US. Accept a one-time payout for Medicare and/or Social Security and be off the system for good.
Posted by: Christopher Monnier at Apr 16, 2008 9:39:03 AM
"Even now, I see an opportunity for America"
We already have more than enough socialists here.
Posted by: Dennis Mangan at Apr 16, 2008 9:41:10 AM
Take all those lazy, uneducated people. I do not know what you want with them but we pay to get rid of them and there is a good reason for it....
Posted by: Chris at Apr 16, 2008 9:46:55 AM
Why is it that a guy who makes his living by wingnut welfare so hostile to other people getting a one-time benefit? Especially when that benefit is porobably compensating for a transaction cost?
Posted by: Mike Huben at Apr 16, 2008 9:55:44 AM
I'm not sure many tired and poor Germans are going to be rushing off to the US to work in Walmart. Furthermore, German unemployment is a bit more complicated than you make out and there is no compelling evidence that a strong welfare state leads to high unemployment either. As you well know. This was little more than a troll post.
Posted by: Finnsense at Apr 16, 2008 9:55:49 AM
If you read the piece, you'll see that the only actual example given is a training that explains how construction work differs in Switzerland and the Netherlands. If this encourages unemployed construction workers (an extremely recession sensitive profession) to move to the neighbouring countries when work is slow, who is hurt? Sounds better than keeping them on welfare, which in turn sounds better than not giving them welfare at all.
Of course you can pretend the US has no unemployment.
Posted by: greatzamfir at Apr 16, 2008 10:50:13 AM
I like to pretend that the internet is a force for good.
Posted by: angus at Apr 16, 2008 11:07:16 AM
While the German welfare state does get my hackles up, isn't this mobility bonus a good idea to reduce friction in the labor market? After all, search and relocation costs are non-zero and probably significant hindrances to an integrated, well-functioning labor market ('probably' because I hate labor ec). Besides, if the FRG still taxes its citizens abroad, it would recoup the same amount as it would for a solely national program.
I'd support both the mobi and a major increase in h1b visas.
Posted by: anglo-burgundian at Apr 16, 2008 11:10:53 AM
Let me make sure I'm getting this correctly:
1. The state gets to safe money by helping people to get back into work.
2. People get to increase their income by getting back into work.
3. That's a bad thing.
Er?
Posted by: LemmusLemmus at Apr 16, 2008 11:24:00 AM
Note that I did not say the mobility bonus was bad, I said it was desperate.
Posted by: Alex Tabarrok at Apr 16, 2008 11:34:23 AM
You can always count on a 'well meaning' government to accelerate a pending crisis. The story does not say how often these entitlements are given and what are the criteria but it sounds not 'im ordnung'.
People cheer the US recession and hope for total economic collapse of the US and the proletariat rising from the ashes to overthrow the powers that be, or at least bask in schadenfreude of the falling dollar and rising euro as indicative of the success of the EU model, but everybody forgets the aging of Europe and the impending social/pension crisis that may follow, much worse than the pending US social security crisis since by some calculations the average age in Europe will be 52 years old by 2050 while the median age of Americans will be around 35 years old. But the EU commission isn't stupid, it may eventually FORCE heartless private investment "American style reforms" if the leaders continually dodge these issues.
Posted by: g at Apr 16, 2008 11:48:20 AM
the link was bald:
http://en.wikipedia.org/wiki/Aging_of_Europe
Posted by: g at Apr 16, 2008 11:50:58 AM
I've often thought this would be an acceptable way to deal with Detroit and NOLA citizens that want to get out and on with their lives.
Posted by: Nate at Apr 16, 2008 12:35:02 PM
I only have anecdotal evidence, of course... but European professionals immigrating to the United States is quite common, while U.S. professionals immigrating to Europe is fairly uncommon.
It might be a language thing, of course. Most German or Dutch or French professionals speak English, while most Americans probably don't speak passable German, Dutch, French, etc. However, it isn't *THAT* hard to learn a new language, people do it all the time, especially when motivated by money and/or a better life.
No, obviously whatever 'benefits' there are in Europe, they aren't enough to attract professional Americans, while whatever 'benefits' there are in the United States are enough to attract professional Europeans. There is a slightly greater cost to Americans for moving (the language), but the cost is less than a few months of Berlitz, so it probably isn't the main factor.
Posted by: Rex Rhino at Apr 16, 2008 1:13:57 PM
Alex says: "The mobility bonus strikes me as a move of desperation. The Germans have created a bloated welfare state"
I think you're economic assumptions may be a bit out of date. Although the US economy was more dynamic the Europe in the 1990s, in recent years, the employment rates for Western Europe and the US have more or less equalized. In fact, employment rates in France and the welfare states of Scandinavia is higher than in the US, with Germany just a hair lower. Italy brings the average down for western Europe. The closing gap partly reflects higher employment rates in Germany and the rest of Europe, and partly reflects lower employment rates in the US.
See
http://www.cepr.net/documents/europe_2006_09_19.pdf
and http://krugman.blogs.nytimes.com/2008/04/12/jobless-men/
Posted by: a student of economics at Apr 16, 2008 1:16:53 PM
Are Germany's unemployed disproportionately foreign (i.e. Turks)? There's a lot of ethnic tension in that country, especially in the east. Maybe this is a way for them to become more "German."
Posted by: Chairman Mao at Apr 16, 2008 1:22:48 PM
Nein, nein,
This is not desperate but desirable. We used to pay for the poor to go to Australia. Australia has had a program to move to unemployed over to Perth to get jobs (I think?). This to me looks like an even more liberal approach by the Germans; not desperate but rather uber rational and liberal.
In fact its part of a trend which your yankfreude is obscuring.
A couple of German banks ran into subprime problems; they were allowed to go bust. A US broker got into trouble and was bailed out. German tax as share of GDP is falling and is now lower than the UK. In the US its likely to rise somewhat over the next few years in light of the response to the recession and the probable repeal of the Bush tax cuts.
It’s the Germans who are heading the right direction these days.
Posted by: Giles at Apr 16, 2008 1:28:08 PM
Rex, I heard stories about a supposed 'braindrain' from Europe to the US, so I tried to find data. But for France, the Netherlands and Sweden at least the net migration to or from the US is small, sometimes US bound but apparently mostly Europe bound.
Reliable data on education level or earnings of those immigrants is harder to get, but even here the difference doesn't appear that strong. In both directions, a large part of the movers are company expats, highly educated and well paid, but also very likely to return. This makes it very hard to see if there are any trends of high-qualified people leaving Europe or the US for good, since they are hard to distinguish from the expats.
So, I found it really hard to say if there is more than anecdotal evidence for a serious flow of professionals to the US. But given the smal size of the streams in both directions ( a few thousand in case of the Netherlands), and the fact that the streams are every similar in both directions, I find it hard to believe there is a strong net effect. But you might find better data than I did.
Posted by: greatzamfir at Apr 16, 2008 3:12:58 PM
"I wonder if that will end up being offered in the US. Accept a one-time payout for Medicare and/or Social Security and be off the system for good."
I seeeeriously doubt that it would ever happen, because it would put the lie to Medicare and SS being anything but wealth redistribution, but I would be first in line for my (small) buyout.
I would also glean an unhealthy amount of happiness from such an event.
Posted by: d.cous. at Apr 16, 2008 3:34:12 PM
"Wingnut welfare" is an odd term. People at AEI are not paid in tax dollars but from the funders of that institution. Similarly, the idea that they do a "bad job" assumes that war-promoters were even supposed to be acting on behalf of the public interest. If we measure their accomplishemtns by whether they got us into war, it appears they were quite succesful.
Posted by: TGGP at Apr 16, 2008 4:08:52 PM
I'm with Giles. Have you never heard of Haartz IV? Were you unaware that there is no national or regional minimum wage in Germany? That many people earn €5/hour for reasonably skilled retail jobs? Are you still stuck in the "sclerotic Europe/dynamic US" false dichotomy?
And Rex's suggestion that the language issue is just a matter of a few months at Berlitz is completely misinformed. You need much more competence at a language than that, to work in a professional job. I should know: I am a native English speaker living in a German-speaking country and working for an organisation where both English and German are spoken. I speak reasonable conversational German, but I would never dream of writing a report in my professional sphere in German. And Americans do NOT generally study foreign languages (except maybe Spanish) at school up to the level that Europeans learn English, nor are they exposed to those languages day in day out in popular culture (think song lyrics).
Posted by: cb at Apr 16, 2008 4:35:11 PM
Alex's assumptions about unemployment rates are quite current, contrary to some comments. According to the OECD, the standardized unemployment rate in 2007 for the U.S. was 4.6% (4.8% in February 2008). By contrast, Germany's was 8.4% in 2007 (7.4% in Feb 08). France was slightly better than Germany, but still worse than the U.S. at 8.3% in 2007 and 8.4% in Feb 08. Denmark and Norway's rates were lower and have been since 2005, while Finland's unemployment rate was 6.9% in 2007 and 6.2% in Feb 08.
Posted by: Tom at Apr 16, 2008 5:51:09 PM
I'm a bit confused. Which is a better comparison, unemployment figures or jobless figures? Tom and the OECD point out that US unemployment is low compared to Western European countries(4.6% as stated above). Krugman and Floyd Norris from NYT point out that the jobless rate (which supposedly counts ALL those without jobs) is high:
http://krugman.blogs.nytimes.com/2008/04/12/jobless-men/
http://www.nytimes.com/2008/04/12/business/12charts.html?_r=2&ref=business&oref=slogin&oref=slogin
I'm getting the impression that anyone can pick and choose the numbers to push their respective barrows.
Posted by: Juicy at Apr 16, 2008 8:32:58 PM
Juicy,
Your impression is right. Most people get these numbers from the OECD employment outlook publication. Here's a recent appendix with some of these numbers:
http://www.oecd.org/dataoecd/53/15/36900060.pdf
You can see fairly clearly that European countries like France and Germany have roughly equal employment/population ratios, but higher unemployment rates, due to the fact that their labor force particpation is higher: In France and Germany a higher fraction of workers try to get jobs relative to the population, but a lower percentage of those who try succeed. I can see arguments on both sides for which is more important and agree that in isolation neither number is terribly meaningful.
Posted by: kapkool at Apr 16, 2008 11:09:51 PM
It's certainly reasonable to say that the general picture has gotten worse in the U.S. and better in Germany in the last year, but Student's claims go way too far. First, he widens the comparison area from Germany to Western Europe, which significantly dilutes the comparison by drawing in boom-regions like Ireland and Spain with very differnet unemployment regiemes. Second, and most importantly, he ignores a glaring difference between unemployment in the U.S. and Germany -- the vast majority of U.S. unemployment is short-term (less than 1 year), whereas in Germany the majority of unemployment is long-term. Put differently, unemployment in the U.S. is mostly a problem is bumps in income, but unemployment in Germany is mostly a problem of a permanently unemployed underclass. That has everything to do with the structure of Germany unemployment benefits. (Until not too long ago, Germany unemployment benefits were a fixed percentage of your former salary, paid forever.)
An important bit of cultural background is that Germans are culturally incredibly non-mobile compared to Americans. German unemployment law has supported this trait by not requiring people to move to find new employment. (Again until not too long ago, if the unemployment office found you a job in the same profession at the same salary as your previous job, if you would have to move to accept it you were allowed to refuse it without loosing your benefits.) So it's quite fair for Alex to present this as a case of the government offering you a benefit, then paying you not to take it.
Posted by: David Wright at Apr 17, 2008 4:32:40 AM
if rex rhino includes england in europe, he do well to note that london is infested with american lawyers, bankers and strategy consultants. probably not for much longer mind.
Posted by: bank rafaidan at Apr 17, 2008 7:47:33 AM
Only in MR would you have people arguing that "my country is more capitalist friendly than yours!"
Not sceloritic??(for now I guess):
Immigration numbers:
Germany: 661855 in - 639064 out = 22791 (2006)
The lowest amount in 15 years.
"By 2050, every third German will be over 60 years old. "
Posted by: jack at Apr 17, 2008 2:20:21 PM
The point about the absence of a minimum wage in Germany is a good one
because it undermines the false dichotomy between `interventionist
Europe` and `free-market America`. Alex, is Haartz IV really all that
different from the US welfare reforms of the 1990s? Moreover, the vast
majority of people who get the Mobi are using it to move within
Germany rather than to another EU country, let alone to the USA or
Australia. Anyway, the Mobi is a good idea, much better than the
massive transfer payments that have incentivized people to remain in
the former East Germany. The unemployment rate in East Germany is
extremely high: German policymakers are now learning that the solution
is to get people to move west. Alex, I think that your native country
could learn from the Mobi. Instead of helping citizens to move around
the country looking for work, Canada does the opposite and has even
entrenched the redistribution of wealth to poorer province in its
constitution.
Posted by: Andrew S at Apr 17, 2008 11:14:07 PM
Andrew:
Germany also has entrenched redistribution to poorer provinces -- it's called the "Laenderfinanzausgleich".
Hartz IV is certainly a policy movement in the same direction as Clinton's welfare reform, but it's hardly landing at the same place. I'd say Germany after Hartz IV is in about the same place as the U.S. before Clinton's welfare reform. (Also, there is a lot of backsliding occuring on the implementation of Hartz IV.)
I agree that Germany's safety net with the Mobi is better than without it -- it's a desperately needed incentive to get citizens off the dole and moving for work. But a much better reform would be to remove the incentives that kept citizens stationary and on the dole in the first place: the principle of east-west wage equality and absurdly generous unemployment benefits.
Posted by: David Wright at Apr 17, 2008 11:37:14 PM
Hi there,
Alex I am glad that you've open this topic. I was pretty shocked when I was reading your post and I can't understand those laws especially in the country with high unemployment rate...
and I got shocked for the second time today while I was reading Slovak "Hospodarske noviny" (our economic newspaper) and the head-line was like "State is gonna support brain drain" - oh yeah, firstly I thought that I had been dreaming, but unfortunately I had not. Our "tremendous" Government is planning to establish very similar benefits for those, who want to work abroad. For Godness sake, we have a lack of well-qualified experts - even the Govrnment is complaining of it, and their first step is to apply policy, that would probably get rid of those, who remained.
I hate socialists
Posted by: Peter Kovar at Apr 18, 2008 1:24:21 PM
