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Germany has maintained a strict no wage growth policy for decades now however to push exports, potentially contributing to the stagnation of the euro zone.
by digi_owl 9y ago
Germany has maintained a strict no wage growth policy for decades now however to push exports, potentially contributing to the stagnation of the euro zone.
- saryant 9y agoNot sure why the parent post is being downvoted: https://www.economist.com/news/leaders/21724810-country-saves-too-much-and-spends-too-little-why-germanys-current-account-surplus-bad https://www.economist.com/news/leaders/21724810-country-save... > Underlying Germany’s surplus is a decades-old accord between business and unions in favour of wage restraint to keep export industries competitive. Such moderation served Germany’s export-led economy well through its postwar recovery and beyond. It is an instinct that helps explain Germany’s transformation since the late 1990s from Europe’s sick man to today’s muscle-bound champion.
- digi_owl 9y agoLikely because i pegged the euro issue on Germany rather than the PIIGS.
- stephen_g 9y agoThe Euro is also a big part of this. It’s undervalued compared to Germany’s economy and inflation rate (meaning cheaper and more competitive exports), but overpriced compared to the countries with trade deficits (PIGS, France, etc). This actually leads to internal devaluation of their economies (and unemployment) to achieve what would normally just be a bit weaker exchange rate. This isn’t a problem for the US states sharing a currency because they have the federal budget spending balances most of this out.
- wolco 9y agoIt is still an issue. In places like Canada they have equalization payments that boost the poor regions from the richer regions.