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I think so-called German "miracle" is mostly a journalist and politics invention. What happened in the last few years is basically forced deflation through sala
by cdavid 16y ago
I think so-called German "miracle" is mostly a journalist and politics invention. What happened in the last few years is basically forced deflation through salary stagnation (even reduction), since you cannot play with you money anymore in the eurozone. This is very good for the companies which export a lot, but is pretty bad for everyone else (including its neighbours).
Economic improvemnts are mainly coming from productivity gains - artificially lowering your costs instead of trying to build more with less is not a sustainable past. But this kind of story is gold for newspapers: export (good !) vs import (bad !), family capitalism (good !) vs shareholders (bad !). All the usual cliches are there.
This story has been told for years in Europe, especially in France, where it is said we should follow the German way. It is very ingrained in the news reporting and the general level of discussions. One striking example is the French left and right discussing about Germany: both will assume that German growth has been better than France, and the left will claim that it shows growths is not well shared, and the right will use it as the proof that salaries are too high in France. Even though until 2008, Germany per year gdp growth has always been lower than France since the reunification.(http://www.wolframalpha.com/input/?i=gdp+growth+france+germany http://www.wolframalpha.com/input/?i=gdp+growth+france+germa...). The OP article basically tells the same story from an Americain POV, even though the data do not back it up at all.
- forkandwait 16y ago> What happened in the last few years is basically forced deflation through salary stagnation (even reduction). As I understand it (which is too say barely), German salaries at the high end are nowhere near the UK or the USA.... Some of us think that might be a good thing, but if that is your metric, yeah, Germany probably sucks.
- cdavid 16y agoI am talking about average/median salaries (everyday worker) - high end salaries don't matter much at a country's scale, I think. If neither gdp growth (below other European countries in the same category as Germany) nor median income growth is a good metric, what do you suggest instead to measure German success ? Your comment made me realize I may have not been very clear - the issue is that Germany's success is measured in terms of exportation as is, which is known to be a common fallacy in economics. If it were because German's products became better at a cheaper price, then it would have been a good thing, but I am arguing it has been mostly through artificial deflation (income stagnation instead of money deflation as this is impossible in the eurozone). This is not very polemic, btw, and is pretty much agreed upon by quite a few people, independently of their political inclination (see e.g. http://www.nakedcapitalism.com/2010/03/martin-wolf-china-germany-commiting-world-to-deflation.html http://www.nakedcapitalism.com/2010/03/martin-wolf-china-ger... for one reference)