Economic orthodoxy has been turned on its head during the Great Recession of the past three years. Left to their own devices, markets have proved to be neither rational nor stable. They don\’t miraculously come up with perfect solutions.
Unemployment is a case in point. According to neoliberal theory, those countries that had the most flexible labour markets would find it easiest to adapt to the more challenging environment, while those countries that insisted on featherbedding their workers would reap the consequences of being soft.
Yes, so what\’s the example you\’re going to use to show that this is all wrong?
Britain\’s jobless performance fell somewhere between these two extremes. The jobless rate rose, although not by as much as in the US and Spain, and by not nearly as much as in the recessions of the 1980s and 1990s. Workers swallowed pay freezes and often pay cuts,
Oh, right, so flexible labour markets mean that it was easier to adapt to the more challenging environment then?
Blimey eh? The things you can learn in The Guardian.