"牛奶可乐经济学：畅游经济自然主义者之路"

Besides the dissimilarity among income levels, population densities, and social customs, distinctive economic conditions in every country can be attributed to differences among economic policies.

Both America and Germany were the most developed countries in the world; however, there was a significant difference between their unemployment rates. According to the author, in September 2006, the unemployment rate in Germany was 4.1 percent higher than that of America. In this case, to prevent citizens from suffering from sudden job loss, both countries provided welfare benefits. The aforementioned gap in the rate was mainly due to differences in economic policies. In Germany, health insurance was provided by the government, while in America, it was provided by employers, which means that Americans had to take positions in firms to fulfill their economic needs. At the same time, for low-income or jobless people, Germany gave more money to provide relief.

The difference reminds me of a concept I learned in economics class called distortion of incentive. Sales tax, progressive tax, and, of course, unemployment benefits are examples of how government interference adversely affects individuals incentives and the market. In the case of unemployment rate, since the German government had already guaranteed that lives would not be unbearable when one was not working, it undermined citizens incentives of seeking jobs. Instead, they were prone to lie around and depend on relief, which caused the relatively high unemployment rate in Germany in 2006.