{"id":417331,"date":"2010-03-11T11:46:41","date_gmt":"2010-03-11T16:46:41","guid":{"rendered":"tag:www.economist.com,21005313"},"modified":"2010-03-11T11:46:41","modified_gmt":"2010-03-11T16:46:41","slug":"keeping-up-with-the-germans","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/417331","title":{"rendered":"Keeping up with the Germans"},"content":{"rendered":"

THE new issue of The Economist<\/em> picks up<\/a> the thread on Germany’s export-orientation where I left off<\/a> yesterday:<\/p>\n

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Germany is rightly proud of its ability to control costs and keep on exporting. But it also needs to recognise that its success has been won in part at the expense of its European neighbours. Germans like to believe that they made a huge sacrifice in giving up their beloved D-mark ten years ago, but they have in truth benefited more than anyone else from the euro. Almost half of Germany\u2019s exports go to other euro-area countries that can no longer resort to devaluation to counter German competitiveness.<\/p>\n

While Anglo-Saxons were throwing money around, Germans kept saving. Domestic investment has not kept pace. The result of Germans\u2019 prowess at exporting, combined with their reluctance to spend and invest, has been huge trade surpluses. Germany\u2019s excess savings have been funnelled abroad\u2014often into subprime assets in America and government bonds in such countries as Greece. It would be absurd to maintain that a prudent Germany is responsible for Greece\u2019s profligacy or Spain\u2019s property bubble (though a few heroic economists have argued this). But it is true that, within a single-currency zone, habitual surplus countries tend to be matched by habitual deficit ones.<\/p>\n

Imbalances cannot be sustained for ever, whether they are deficits or surpluses. Yet surplus countries tend to see themselves as virtuous and deficit countries as venal\u2014the implication being that the burden of adjustment should fall on the borrowers. Germany\u2019s response to the troubles of Greece, Spain and other euro-area countries has followed just such a line. A bail-out for Greece, once taboo, is now being debated\u2014and German ministers have even come out in favour of a putative European Monetary Fund (see article<\/a>). But the idea that Germany should itself seek to adjust, through lower saving and higher consumption and investment, still seems unacceptable to Angela Merkel\u2019s government.<\/p>\n

It is certainly true that Germany\u2019s neighbours have a great deal of work to do…But Germany also needs to push ahead with liberalisation…<\/p>\n

A bold programme of German structural reforms would do much to boost consumption and investment\u2014and, in turn, to raise Germany\u2019s GDP growth, which remains disturbingly feeble. Germany can also afford growth-boosting tax cuts without ruining its public finances. If only Germany would lift its head, it would see that this is in its own wider interest, both because it would be good for German consumers and because it would help the euro area to which it is hitched.<\/p>\n<\/blockquote>\n

The new issue contains a full Special Report on Germany, which I’d encourage you to check out.<\/p>\n","protected":false},"excerpt":{"rendered":"

THE new issue of The Economist picks up the thread on Germany’s export-orientation where I left off yesterday: Germany is rightly proud of its ability to control costs and keep on exporting. But it also needs to recognise that its success has been won in part at the expense of its European neighbours. Germans like […]<\/p>\n","protected":false},"author":4534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-417331","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/417331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=417331"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/417331\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=417331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=417331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=417331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}