Germany’s labor market turned around in a dramatic fashion after Schroeder implemented the Hartz Commission’s sweeping reforms between 2002 and 2005. In contrast, Obama’s Immelt Council quietly disbanded without making substantive proposals, and America’s worst jobs recovery of the postwar period continued.
Obama cannot duplicate the German reforms. They reject his Keynesian belief that jobs are created by government stimulus. Instead, the Hartz reforms rest on the common sense notion that people take jobs when work, rather than welfare, pays. Such an approach violates Obama’s core belief that government must make the lives of the unemployed as comfortable as possible. No, the Germans say. If the state gives too much, the unemployed will have no incentive to take jobs, even when they are available.
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