The Times has an article today about Germany’s faith in austerity as the answer to depression. It’s sad reading for anyone hoping that Europe will get its act together; it’s especially galling that Germans remain so committed to belief in expansionary austerity, despite the thorough empirical debunking the notion has been given over the past year and a half (see, e.g., this IMF working paper (pdf)).Basically, Germany engaged in Austerity, and cut labor costs, etc. But what that meant was that money pored in from other EU countries -- which Germany lent back to them at low rates (Just like with China and the U.S, but actually to a much greater extent, at least % wise)
But the Germans believe that their own experience shows that austerity works: they went through some tough times a decade ago, but they tightened their belts, and all was well in the end.
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Why? Because the key to German economic affairs this past decade has been a truly massive shift from current account deficit to surplus [chart]
Now, other countries within Europe could emulate Germany’s past if Germany herself were willing to let its current account surplus vanish. But it isn’t, of course. So the German demand is that everyone run a current account surplus, just like they do — something that would only be possible if we can find someone or something else to buy our exports.
The US has many things that Germany does not haveHAHAHAHAHA Seriously compare the damage caused by the last financial crisis by our "innovative, competitive" financial markets to what happened to Germany (basically nothing. Only the slow bubbling problems of other Euro countries is a problem, one that still hasn't manifested itself)
* innovative and competitive financial markets
Well, try to get some VC in Germany. VC in Germany is run by the scumbags of the earth. The access to capital in the US was just much better. This build the silicon valley. Germany has no silicon valley and it never will have one.The Silicon Valley VC industry is quite separate from "Wallstreet" (it's all the way across the country!). And what they do, in terms of finance isn't really that 'innovative'. They just give money to people who they think have good ideas, it's pretty standard. There is certainly a lot of VC money in Silicon Valley, maybe more then in Germany, but I don't see it as a very "innovative" field compared with the crazy "innovation" they have on wallstreet.
And what makes Apple or Google "US companies"? They hardly employ anybody in the US, pay very little taxes there, and their shareholders are from all over the globe. Who gets the profits from their high margins? The shareholders, including quite a few Germans...Google is still mostly a software company, most of their employees are in the U.S, as far as I know. Also, Apple has all those apple stores. Obviously if the deal with Motorola goes through they'll be in the hardware business as well.
The Silicon Valley attitude: A million dollars isn't cool...it's simply that almost any recent enterprise in the US has an "exit strategy" as part of its make-up.This is also a problem that Canada's knowledge economy/tech sector has as well. People don't want to build world-beating companies. Instead, the cultural wisdom states that you have to sell after you reach a certain size.
Germany's currency should have increased in value relative to its trading partners, but it hasn't because of the Euro. This has meant that German goods have been cheaper than they should have been, which has helped their exports at the expense of other countries in the Eurozone. This is very different to the USA, with the dollar as the world reserve currency and China manipulating its currency relative to it.And in the U.S, people can move freely without learning a new language, and if states out-compete eachother they'll end up paying more in federal taxes while the poor states pay less. If you take NY, NY and CA and compare it to Mississippi and West Virginia you'll find that those wealthy states pay a huge amount of cash into those poor states in terms of federal services (healthcare, roads, jobs with the millitary-industrial complex)
Don't get me wrong, Germany's good education, high skills, and excellence in niches of importance to the developing BRIC countries are great, and we can all learn from her. But the macroeconomic system has been of huge importance.
I really wish we could avoid the type of discourse we laugh at each other's arguments. I think the rest of your points are reasonable, but starting it off this way is insulting and dismissive.The US has many things that Germany does not haveHAHAHAHAHA
* innovative and competitive financial markets
I really wish we could avoid the type of discourse we laugh at each other's arguments. I think the rest of your points are reasonable, but starting it off this way is insulting and dismissive.I didn't intend to 'dismiss' the poster, but rather point out how out of step that was with how Americans perceive our financial sector.
Acceptance? ;-)Cool Papa Bell, you've really been on a run of making innacurate statements, and then mocking people who are correct lately. For example. I mean, for example here you claimed that Wallmart and Newscorp were "family owned" business. Then you called me a "nimrod" because I knew you were wrong.
One useful thing about armies is that they'll take young people from the poorest backgrounds and give them training and experience that they'd never get otherwise.Well in a lot of European countries this is typically done by 1) Having a functioning k-12 system, even in "poor" neighborhoods and 2) free college.
Economic migrants do shift around Europe all the time. In the days before the EU the Turks did it, so I'm not sure why you think the Greeks couldn't.Yeah, but it's not really even remotely comparable. A Turk in Germany or France isn't really considered to be German or French, they aren't integrated entirely into society, seen as equals or a complete substitute for a German or French worker. On the other hand, someone moves from Alabama or Georgia to NY or California they're indistinguishable from any other person from NY or California, aside from the accent. If they move from the Midwest, they won't even have different regional accent (Or in the case of an NY, a Midwestern accent is actually considered more educated/middle class then, say, a long island accent). Everyone is an "American" and the state you come from is mostly just considered like an administrative region. Someone could move from New Mexico to NY or CT and get a job at a hedge fund or be elected governor. Can you say the same thing about someone from Turkey or Romania in Germany or France?
You don't redistribute money in the Eurozone, as far as I know, but Germany has this same thing going on, where rich states subsidise the poor states. Bayern is the only state that has ever moved from being a net taker-in of tax money to a net giver of tax money. It's probably just how federal systems work.Right in Germany But the problem is you have the whole eurozone using the same currency, like the U.S, but unlike the U.S. cash does not flow from rich areas to poor areas.
Altruism isn't required for beneficial results. Japan is a good example of this because the US government sought to influence the creation of a strong and prosperous nation based on democratic government that would be an ally and a bulwark against communism. The Marshall plan had similar goals. Whether these are altruistic policies doesn't take away from their actual effects. No one should be so committed to the idea of the US government as an object of scorn that they are unwilling to consider the possibility of mutual benefit.The problem is that the cold war is over. Who exactly are we protecting Japan from? China? Who are we protecting Germany from? Are angry Greeks going to invade?
Only if you believe the things they're spending those loans on are worthless. I mean, presumably the Germans gave something in return, so it's really a transfer of wealth from future generations of Italians, Greeks and Spaniards to the current generation. A transfer greased, perhaps, by excess worldwide savings (including Germany) and/or creative contracts by US investment banks.You realize there's a "wealth transfer" of, like, everything ever created from current generations to future generations, right? In the U.S. right there are supposedly about $188 trillion in assets. All of those are getting transferred to future generations.
For a moment, I thought I stated it backwards. I'm guessing your point is there's enough assets in the world to cover government debt. How does that look right now for Greece or Italy?A lot worse then the U.S, UK or Japan, which have similar debt/GDP levels, but who's debts are denominated in their own currencies.
US Report Sees Perils To America's Tech FutureTL;DR: Pfizer's patents are expiring.
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Many 'attribute part of the lower unemployment rate to the German work ethic. Yet Germans, on average, work far fewer hours a year than Americans, thanks partly to five or six weeks of vacation.'
Not a single mention of minimum wage, or it's general absence in Germany. Seems like the obvious answer to both rising inequality and low unemployment.
posted by pwnguin at 11:33 AM on January 22, 2012 [2 favorites]