From THE BOSTON GLOBE
Monday, July 10, 2000
BY ALEX MARSHALL
PARIS — If you’re hankering to watch a movie after midnight here, you don’t search for an all-night video store. You walk down the street to the nearest Cinebank, a machine carved into a wall that, similar to an automatic teller machine, dispenses movies instead of cash.
Slip in your credit card, scroll through some movie titles, press a button, and presto: out from a slot emerges the latest Depardieu, Schwarzenegger or Julie Roberts flic.
Such machines haven’t hit the United States yet. And with our low labor costs, they may never. In this country, it may always be cheaper to pay someone to man a late-night video store, rather than pay to set up the machine and develop the technology that makes it possible.
This small example illustrates a big point: Western Europe is probably far more advanced than us technologically on a day to day level, in part because its higher labor costs push employers to innovate more.
Although France, Germany, Sweden lag behind us in computer and Internet use, they are ahead of us in the day-to-day mechanization of life in ways that weed out the more boring and simplistic jobs. Indeed, some Europeans say America appears almost Third-worldish because the continued presence of jobs whose skills consist mostly of standing around.
It isn’t just video clerks that machines are replacing in Paris. Steer your car into a French parking garage, and you will never see a parking lot attendant. A machine handles it all. In one system, a machine dispense a code that will raise the bar for exit after you have paid the cash for the time spent in the garage.
Other types of automation have become ubiquitous in much of Europe. Hand-held credit card processors are standard in many restaurants. Some gas stations are completely automated. The newest subway line in Paris has no operators at all.
Why this greater prevalence of automation in Europe? Because quite simply, they have better things for their people to do than to sit all day in a booth in a parking garage. Employer costs are much higher in most of Western Europe. Wages, health care contributions, pensions, family leave and general taxes all add up. This pushes employers to automate — which in the long run makes economies more productive and efficient.
These high labor costs also push up unemployment. But the relationship is not absolute. Germany had lower unemployment than the United States in much of the 1970s and 80s, even while having far higher labor costs.
In the United States, a healthy dose of social benefits, higher minimum wages and other pro-labor policies might actually improve our nation’s competitiveness, by pushing companies to modernize.
Although we boast of an admirably low-unemployment rate, the Brazilification of our economy continues. We may have already entered a new Gilded age where the Internet millionaires think of ways to spend their money, while the nameless hordes collect the parking payments for their BMWs.
Europe is desperately trying to copy the entrepreneurship and flexibility of the American economy. Here in Paris in government and business circles, the talk is all of privatizing, marketizing and facilitating Europe’s entry into “The New Economy.”
But astute observers recognize that economics are like lapel sizes and hem lines — different flavors go in and out of fashion with the times.
“There is no superior system,” said Robert Boyer, a French analyst in Paris and author of the 1999 paper “The Diversity and Future of Capitalisms.” “Each system has its strength and its weakness. According to the international economy, the strengths or weakness will pop out.”
So while Europe is busy imitating the United States, we might pause in our orgy of self-congratulation and begin imitating Europe, before the next fashion in economics hits and we are out of step. A strong dose of social protection and higher wages would moderate income inequality and boost productivity by discouraging businesses from using low-skill, low-pay jobs as an integral part of their business plans.
Europe will probably never achieve American-style, free-wheeling capitalism, and America will probably never achieve the equality and harmony of European social democracy. But a lean in the direction of the other by each might help each enormously.
———————-
Alex Marshall is the author of How Cities Work: Suburbs, Sprawl and the Roads Not Taken.