Common Economic Challenges: Fill & Download for Free

Over the past decades there used to be that, almost axiomatic, empirically derived [1] law in economics that the natural unemployment rate in the US was bound to be lower than in most other western countries (notably European ones). I concentrate mainly on the EU in this answer since the other European countries are mostly no valid comparison (too small, too resource/money-rich, too poor). Japan has a completely different system so does not compare well either.The above picture from Eurostat illustrates the unemployment in the EU as a whole and three large countries for the last three decades. The following table from [2] further aggregates some of these numbers for the three largest economic areas over the last four decades of the 20th centuryIt also shows that the natural rate of unemployment can change over time. Essentially, it gets interesting from the 80s, when the full employment Europe enjoyed while rebuilding itself from the ashes of WW2 ceased to be. The first thing to take away here: We are not in any really unusual situation concerning unemployment in the current crisis [3], European unemployment rates have been at very similar levels at various stages over time. People tend to (often deliberately) forget that when they talk about the Euro and the current state of the union. The traditional reasons given for the higher natural rate of unemployment are better social security, stricter labour laws, minimum wages, lower labour mobility and some others.Second, the question is actually not one but several questions if you read the details. First of all, the economy clearly isn't fine. But the sky-rocketing youth unemployment may actually prove to be the more pressing problem in the long run. I do not share the extremely bleak outlook of some of the answerers in What are the long-term consequences of near 50% unemployment for young people in Spain, Portugal, Greece, and Italy? but nobody can in good conscience argue that there is not a large part of a generation that we might lose in some places of Europe [4].I think some of the reasons for European unemployment in general and the youth in particular have been well explained here: What specific public policy mistakes did Greece and Spain make that helped contribute to their ~50% youth unemployment rates? So I am not going to repeat them.Europe's chief economist Olivier Blanchard has a nice pre-2008 article that further explains the higher rate of natural unemployment in Europe, although things in Germany for example have somewhat changed over the past 8 years [5]:Most findings confirmed the prevailing wisdom. In most countries, the main proximate cause of the increase in unemployment in the 1970s and the early 1980s was indeed a series of adverse "labor supply shifts," that is a series of steady increases in wages given unemployment and the level of technology. By the mid-1980s however, this movement was reversed, and wage moderation prevailed. By the early 1990s, in most countries, the early adverse labor supply shifts had been fully reversed. And, wage moderation was indeed stronger in some of the countries with the sharpest turnaround in unemployment: the dramatic decreases in unemployment in Ireland and the Netherlands indeed were associated with unusually large wage moderation from the early 1980s on.Of course, in the current discussion it has to be mentioned that the Euro itself was not exactly thought through all the way to the end. Then again, it is a historically unique experiment, so that should not come as a surprise to anyone. I am still waiting to see evidence for the scores of people who actually knew how it would play out. Or those who can predict the future now. Nobel-prize winner Mundell at least advocated a European currency in general:Rather than moving toward more flexibility in exchange rates within Europe the economic arguments suggest less flexibility and a closer integration of capital markets. These economic arguments are supported by social arguments as well.The optimum currency area theory [6] talked about here is a comparably sound theory to start with but, as usual, criticism is found aplenty. It is furthermore always helpful to point at all those other countries with their own currencies, some of which are doing well, some of which are clearly not at all. It is empirically well established that devaluating your currency is not always the silver bullet it is made out to be in the press. It is more of a last resort and often found to cause a vicious circle instead of a long-term improved competitive position. Look here for the relevant (if slightly older) data: Do the problems facing the euro validate the UK's decision not to participate? In any case, the euro and the current economic woes in Europe and globally are only one of the factors behind unemployment. Even in boom times, there was rarely to never full employment in recent decades.Thus, enough economists argue that the times of full employment are gone in the western world forever, or better, that the natural rate from the 3-4% which were traditionally called full employment rose significantly to the maybe 8-10% we used to see over the last years and decades. Reasons given are the increasing automation and higher technological requirements in almost any workplace, so that a certain, less educated percentage of the workforce simply is not able to find appropriate work any more. While this can be offset somewhat with improved education at all levels, it probably cannot be fully compensated for and thus might leave some people out of work forever. There are other voices who argue that this might not be/come true as well [7].Developed countries, that have low unemployment through very strong exports are currently circumventing some of the mentioned problems. Possibly partly at the cost of others (but remember: economics is not a zero-sum game). Whatever your stance on that particular discussion, it is clearly not the model that ends all questions. Yet, in the case of Germany and others, it highlights an important point: The need for foreign workers to fill a number of positions in high-tech industries - despite existing domestic unemployment! Nationalists in any country will never understand that (re: H1B visa in the US, recent cuts of student immigration quotas in the UK). In the case of the EU, these workers are preferably coming from inside the union, due to at least somewhat aligned systems and the ease of travel/visas.Personally, I would never call for a US-style, fully "flexibilised" labour market, hire-and-fire, if you will. The balance between unions and the industry simply works too well given the examples of Germany or the Nordic model. Social market economy can cushion a lot of the ugly downsides of pure capitalism. See again the Blanchard article, where he explains that government policies are often not the decisive factor but e.g. wage moderation exercised by unions can actually be a vastly successful strategy as proven in the Netherlands and Germany:This set of results, as a whole, has a number of policy implications: Labor market institutions matter; they affect both the size and the duration of the effects of the shocks on unemployment. High social protection is not inconsistent with low unemployment. However, it must be provided efficiently.However, there are many industries and specific rules, which can and should be relaxed and indeed slowly are. In Germany several things come to mind that require action but the priority is definitely on the countries with stricter laws such as Spain. Besides this, better aligning the various countries in the EU to create an actual common market (which, contrary to what many people in the UK like to believe, is not simply the absence of tariffs) is a key challenge and bound to improve economic conditions, too.Besides vastly varying cultures and differences in policies, language will of course never cease to be a problem in Europe, and is one that some other economic areas do not have to deal with in that extent. Language education is already pretty good in many countries of continental Europe (Is French or German more useful when it comes to travel in Europe?). But by now even the most ignorant people realize that speaking more than one language is not only a real life necessity but also a large investment in your economic future and a safety net if your country goes awry. English anyway, but also the Goethe Institutes are doing double and triple shifts these days.This will lead to improved labour mobility in the EU, both domestic and in between countries. It won't ever be near the level of the USA [8], but will be enough of an improvement to make an impact. Hundreds of thousands of people have been going north in the EU over the past years, despite the existing language barriers [9]. Being a long-term expat in the EU myself I have a hard time seeing why this would constitute a problem (though I understand it might be one in individual cases). Quite the contrary. It would be nicer if the flow was not so one-sided though.Finally, some of the measures that Joe Geronimo Martinez mentions have been tried all around over decades (esp. reducing working hours), with not exactly overwhelming success. Economists call it the lump of labour fallacy [10], explaining why it largely will not work, although it cannot be generalised that there is no effect at all. Conscription is really on the way out (Germany is only the latest instance to show this) because it hardly makes sense to have your well-educated engineers (for example) locked away for a year in the military. That is not a net benefit to society.Overall, there is little doubt it will get worse before it gets better but it will get better. Concerning the natural rate of unemployment, not only in Europe, the question remains though: How much better can it even get exactly?[1] This would constitute a contradiction in every scientific discipline. Not in economics.[2] Bermeo, Nancy, ed. Unemployment in the new Europe. Cambridge University Press, 2001.[3] At some point it starts being ridiculous calling it that. Maybe it is simply a current equilibrium.[4] I've addressed the problem from a different angle here: Martin Strohmeier's answer to Is apathy the new Black Death?[5] http://www.nber.org/reporter/summer04/blanchard.html[6] Optimum currency area[7] E.g. http://www.spiegel.de/karriere/berufsleben/vollbeschaeftigung-iab-chef-moeller-haelt-sie-noch-immer-fuer-moeglich-a-864126.html (German)[8] There are some numbers somewhere on Quora, will try to find them.[9] European Immigration to Germany[10] Lump of labour fallacy

In order to appreciate this question, one must first look at the statistics available about overseas students in Australia. The most authoritative source of information is from the Australian Parliament’s “Overseas students in Australian higher education: a quick guide”. According to this publication, the Australian Bureau of Statistics (ABS) showed the latest available figure ie. about 580,000 foreign student enrollments and contributing A$32.4 billion in revenue. About 68.5 % of the revenue came from higher education.The countries with most students comes from China 170,547, India 64,364, Malaysia 25,396, Nepal:23,614, Brazil 23,534, Vietnam 23,270 and South Korea 22,650.From these statistics, there is a financial dependence of the universities on overseas students.Currently there is no concrete evidence to show that the financial dependence of overseas students has improperly influenced the way universities are run. Much of the adverse comments on this subject is focused on overseas students from China and is related to geopolitics, ie. the China Panic in Australia, the US-China trade war and US-China fight for dominance in the Asia Pacific.The pros and cons of having Chinese overseas students in Australian universities can be found by googling “John Menadue overseas Chinese students in Australian universities”.A Sydney Morning Herald comments, related to this article, is reproduced here in reference to the presence of Confucius Institute in Australian universities.Story: ‘Like the Alliance Francaise’: Sydney Uni boss defends Confucius InstituteAll these bodies, the Alliance Francaise, Goethe-Institut and Confucius Institutes have a common goal in promoting their language and culture in Australia. Prof. Spencer is making a brave stand on the issue of Confucius Institutes at the universities because he believes that there is no sinister agenda, particularly the media spin that teachers are selected by the Chinese government, hence must be exerting undue, unwanted foreign influence. The statement by Human Rights Watch's Australian head Elaine Pearson also showed a partisan view of China, not based on facts, but on perceived geopolitical and ideology differences. Prof Fitzgerald's comment is interesting regarding funding through a private NGO. However, who is game enough under the current "China Panic", "FITS Act" and media bias, to take up the challenge of running a Confucius Institute with Chinese money? Perhaps when all this China bashing has subsided, the Chinese government may consider taking Prof Fitzgerald's advice. The Confucius Institute affair is only a distraction considering the wider issue facing our nation - a debate on Australia-China relations without fear or intimidation and with unbiased information. In this way, we may arrive at an independent Australia policy towards China that is consistent with our national security and economic interests.

Note: This was an answer from a similar question, which for some reason has been reported and made invisible. I am therefore posting it here, with the original comments.DISCLAIMERI came to Germany on a Niederlassungserlaubnis (settlement permit) almost immediately, so I don’t know how well this relates to people who are on other types of visas (e.g., student visas). Also, instead of grouping advantages and disadvantages, I will discuss them in terms of major areas. As always, do tell if your experience is different.IMMIGRATION POLICYThe first thing I noticed is that the immigration policies in Germany are actually quite lax, at least in my case. It did not take me long to receive my residency in Germany, which enabled me to look for work right away until renewal (when my passport expired). There is a language and social integration requirement - that is covered by the Integrationskurs, mandated to achieve (theoretically) B1 German level and understanding of the German sociopolitical fabric.However, the Germany immigration policy is rather ambiguous. This, in my opinion, is the reason Germany went into the whole mess with the refugees in the mid 2010s. While I think it is a moral duty to help out those who fled their homeland for their lives, the German immigration system is not designed to handle such a large number of applicants. Nevertheless, non-European immigrants represent only 8.7 per cent of the German population in 2017. So maybe, statically, the German govern still does not have to need to regulate their immigration rules more thoroughly? I don’t know.LANGUAGE BARRIERI work in a German environment and function in German professionally and socially. Of course, I have an accent, and sometimes I might tumble when I try to express very complex ideas. For English speakers, German has stricter and more complex grammatical constructs, having largely borrowed from Latin. Also, despite being a “Germanic language” English does not resemble German all that much. But I strongly believe that if you put your heart to it, you will learn it fast. Native speakers also have the courtesy of correcting you on the spot, but all in all they are very supportive of you taking an active effort.My problem is that, if you take a German course in Germany, you are stuck with syllabus from the Goethe Institut or the TELC. Both are intended as one-size-fits-all for the lowest common denominator. If you want more than that (i.e., working in a professional German environment), you will often be left to your own devices, which means a very steep curve of learning-on-the-job.WORKING IN GERMANYI would first like to dispel two myths about working in Germany:The bar for getting a job in Germany has risen for Ausländers quite a bit over the years. The additional language and degree certification requirements could be interpreted as not so subtle signs of protectionism.Second, it is a lot easier to get sacked in Germany than you think, often on legally questionable grounds. Once you passed Probezeit (probation) on an unlimited contract, you should seriously consider signing up for a Rechtsschutzversicherung. Please read my other answer for reference.While other countries care about only getting the work done, Germany is the only country I know of that also cares about the time it takes to get it done. This gives rise to the term Zeitdruck (literally, “time pressure”), which you will hear frequently. There is also a distinctive division of work and play. Bringing work home, or working extra hours in general, though sometimes inevitable, is strongly discouraged. On the good, you won’t be stuck working 12 hour days (it is illegal in Germany).Colleague-wise, you see the majority of your native compatriots are extremely slow to warm up, even to each other. They are be more pragmatic than colleagues from other foreign origins. They really think they can throw you under the bus and still be your beer buddy (see part about slow to warm up). This is something you need to get used to.HOUSINGI am hoping that the housing arrangement could be made more flexible. Everywhere I went you have to submit an application, and there is a strong bias on who can pay rent long term. Rent has also risen quite a bit over the past decade. It is not unusual to see studio apartments costing over 100 000 Euros in big cities (like Berlin).INTERACTING WITH NATIVESThis is a tricky issue. I had the fortune of living mostly in the former West Germany when I first landed here. The people have been more courteous and accepting of Ausländers. I did not run into issues with open discrimination, aside from people assuming initially that I don’t speak German and are surprised when I do.When I moved to (former) East Germany for work a few years ago, I noticed that I was not trusted by the local populace (I was once asked to leave my driver’s license with them just for pushing the shopping cart to my car in their parking lot). In the very rare occasion I got into small, race-based conflicts. However, my experience is still, for the large part, incident-free.I have not had first-hand experience with the Rechtsradikals (alt-right supporters). They are more prevalent further East, like Thüringen or Sachsen, where the far right party AfD (Alternative for Germany) has gained considerable support in recent provincial elections. The general German population, however, still strongly oppose them and often organize large counter demonstrations against them.Verein (“clubs”) is a very direct way of bonding with the local population. Every village has at least a Sportsverein (for general sports), a Turnverein (for gymnastic sports), Kegelverein (similar to bowling) and a Gesangverein (choir). These amateur clubs are a great way to get to know your townsfolk, who, in most cases, will not hesitate in lending you a helping hand. I once got into contact with a former CEO of a German automotive OEM through a village festival.MEDICAL AND SOCIAL SERVICESOften I hear from other people complaining how much income goes to taxes and social security. I don’t share that view. As productive members of society, you have the responsibility of contributing to the nation’s overall social welfare. I place trust on the fact that, I will have some recourse for securing my survival should I be down on my luck, until I can stand on my own two feet again.A big chunk of your monthly salary goes to your health insurance. Medical staff here are typically very professional and are well trained. One German surgeon told me that while Americans doctors are good at research, German doctors are good that fixing people up. Don’t expect them to speak English by default (in fact, the majority don’t).Arbeitslosengeld (unemployment insurance and social assistance) are no longer as generous following implementation of the Hartz reforms. True, it is still much more forgiving than other countries (UK or US, instance) but has receded in scope. While the Agentur für Arbeit (Ministry of Labor) could provide you with a lot of support, they have a lot of authority over what you should be doing for the purpose of getting you out the statistics.One thing about retirement: How much you get out of the German public pension system will depend heavily on your salary and length of employment in Germany. If you are a late bloomer like myself, you will need to consider additional retirement funds.NATUREWhen you live in Germany long enough, you will hear a lot about Spaziergang (short walk in the park) and Wanderung (hikes). They both form the social fabric of the German collective consciousness. You will also find yourself doing a lot of that, either by yourself or with others. There are many established trails where you can relax and reflect on your daily activities.Germans are also obsessed with the environment, and they did a lot for it (whether they are actually useful or not). Mühltrennung (separating rubbish into paper, metal, glass, etc.) is the ultimate epitomy of this obsession. Especially if you live in the Berlin area, you will see that some residents are more religious - or radical - on this than any other in the country. Their solution for environmental protection involve banning all vehicles and taking up veganism.GENERAL QUALITY OF LIFEMy life in Germany is not all smooth sailing, but in general I have not regretted moving here. There are still relatively better - albeit shrinking - career opportunities, and it is not as turbulent as I would at home. I have a relative stable base for which I build my family in a clean and relatively supportive environment. Of course, there are various challenges associated with being an Ausländer, such as upward mobility, cost of living, and in the rare case, discrimination, but I think overall Germany is a good country to be settling in, and I hope this will give the reader a general overview of the pros and cons of being a German ex-pat.Original Comments -Relevant links from user:BMBF information on Settlement Permit (in English): startseite_node (seems to be down for updates at the time of this writing)Act on the Residence, Economic Activity and Integration of Foreigners in the Federal Territory (in English)AufenthG - nichtamtliches Inhaltsverzeichnis (in German)