Story here.
Highlight:
The German emphasis on competitiveness and the Obama Administration’s obsession with demand management captures well why these economies are moving at such discrepant speeds. The Obama Administration proposes significant tax increases on consumers and small business owners (most small business income is reported by taxpayers in the top two personal income tax brackets that are set to rise substantially in 2011), but is willing to spare no expense to prevent any contraction of state and local payrolls. Rather than focusing on public support for consumption expenditure, the Obama Administration should be more concerned about U.S. competitiveness and productivity. As former IMF Chief Economist Ken Rogoff recently wrote, the Obama Administration’s preferred narrative of the Great Depression – where premature end to stimulus resulted in the 1937 double-dip – totally ignores how the increase in the “role of the state in an often chaotic and unpredictable fashion” suppressed private sector spending and investment. The monomaniacal focus on demand stimulation inures Administration officials to policies that sow uncertainty and slow the private sector’s recovery.
But not on purpose, I don’t think.
this result is certainly unexpected, but i don’t see how stories like this help our children…..
The hope is that by relating stories that show the difference in outcome, that our children, when it’s their turn, won’t fall for the banana in the tailpipe, again.
You see, like the New Dealers, the Obama raw dealers believe that if you keep the exhaust concentrate up, your engine is running fine. Not realizing that the back pressure will alter the mixture so that when we apply a spark, we get, nothing. We can only hope that in 70-80 years, our grandchildren don’t come back to the notion that they know better.
Perhaps German banks did not need the $11.8 billion of TARP funds received from U.S. taxpayers?
“Criticizing the structure of the U.S. Treasury’s $700 billion Troubled Asset Relief Program (TARP) that was created to rescue the nation’s financial industry, the Congressional Oversight Panel said in a report on Thursday that the foreign companies got greater benefit from the U.S. bailout program than U.S. companies realized from other countries’ bailout programs. …Germany’s Deutsche Bank AG (DB) received $11.8 billion. According to the report, out of the total 87 financial institutions who have indirectly benefited from the bailout of AIG, 43 are non-U.S. ”
Just perhaps.
1. German taxpayer subsidized German banks with at least 100 Billion Euro:
http://de.wikipedia.org/wiki/Finanzkrise_ab_2007/Regionaler_Verlauf#Deutschland
2. If the US taxpayer money would not have gone to international banks that operated at US capital markets, the resulting outflow of capital would have been enormous. Now you might say “fine”, we don’t need it – I don’t think so, but I can’t proove otherwise right now – but it was US policy for twenty years to facilitate and enhance international investment in its capital markets.
Actually you can’t compare these two in that way.
1. Germany’s growth just mirrors what the world economy is doing, nothing more and nothing less. It just does not have any national economy left. 40% of Germany’s economy consist of trade or investment across its borders. This is actually not surprising at all, given the fact that Germany has NO natural ressouces WHATSOEVER left that could be exploited for world-market prices (e.g. coal, farmable land – thus both heavily subsidized).
Germany either stays competitive against the Asean Tiger states and the other upcoming states (e.g. China, Taiwan, Vietnam, Indonesia, …) or its economy crumbles down to an overpopulated agrarian backland.
2. As for the U.S.A.: I don’t know. It is very much different from Germany in that its international part of gross product is just 7% (again don’t know if that is exactly true, just heard that figure recently).
Can it just be that an economy which was on an unsustainable part for some time needs two or three years to reorient before it picks up growth again?
Yeah, productivity and making stuff are useless. It’s all about government jobs and “stimulus.” And let’s not forget Bush’s fault for 8 years . . . blah, blah, blah.
No offense but I’ve seen some lame attempts to explain away stuff that doesn’t square with one’s purported worldview, but this takes the cake.
Unless of course your entire post was meant tongue in cheek?
Even if not, it simply passes the buck to the vague, undefined and mysterious “world economy” magically accounting for Germany’s rise in GDP, which explains nothing. Goat herders in Burkina Faso have had a bumper year and are buying more Mercedes Benzes because they just automatically send a portion of their money to Germany regardless of the quality of what Germany produces and at what price (i.e. its productivity)?
You become rich by turning lower valued goods into higher valued ones, i.e. turning trees in the forest and rocks in the ground into the concrete foundation and wooden frame of a house, turning the silicon found in sand into IC’s that run computers. Every nation that wants to be economically successful/rich must do so by focusing on productivity, and the free market is by far -as history has shown time and again- the most effective way of making sure that people end up producing what other people actually want to spend money on, i.e. what they value. The only thing not mentioned in the blurb is that Obama has actually focused slightly on productivity, but exclusively for the “green” sector of the economy, making car batteries and windmills and whatnot. Things that don’t work very well and as a result people haven’t been willing to freely spend far more money on to get lower performance relative to the other available technologies. This is what Spain has done as well, trying to build a Green economy, and instead it has wrecked theirs. There’s no bonanza of green jobs out there, when you pay more for basic energy, an input for every value adding process, the entire economy takes a hit. It would be like saying having more people go back to farming would magically cause our economy to take off. You can’t politically chose winner and loser industries, you’ll lose every time.
We agree on
- It’s not Bush’s fault
- As for Germany, the contemporary reason for growth is not only “world market” but as well competitiveness and productivity
- The fallacy of “green” economics, especially when it comes to driving up energy prices
We do not agree on:
- what the graph does actually prove. The German austerity policies the link refers to took over a decade from first implementation to bear fruit. The graph is for two short years.
– Most of the actual demand growth for German goods comes from China. Perhaps it is only a side effect of the Chinese property boom and Germany will look worse than the USA next year?
- on how far an economic policy is necessary for Germany (40% GDP by international trade) is best for the USA (still more a national economy than any other major player)
Fair enough, I’ll buy that.
Have to say, I would have liked to see the past 10 years’ worth of growth data before interpreting this graph. (Not Lex’s fault – that’s all they showed in the linked article) Such a short timeline raises the ol’ “How to Lie with Statistics” ghost.
Hajo makes some very good points. Germany has had an export economy for many years, and their products tend to be of outstanding quality. Germans have taken great pride in that over the years, even to the point of finishing the outside of tank engines when the we, the Brits and Ivan left the sand patterns on the engine castings.
They also have a racial memory of what happened in the Weimar Republic that brought on their depression and rampant inflation. They got Hitler for their troubles, as you so often get his type when things are bad and people start projecting their wants and desires on someone that seems to be telling them what they want to hear. We now have the same type of political “leadership” the Germans got in Weimar. Weak, ineffective, spineless, or utterly nuts. Your normal RINO or Dimocrat, in other words.