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Comment by WastingMyTime89 | Hacker News Reader

The Hartz reforms are fairly famous, yes. It’s mostly social dumping. Forced contraction of actual wages through reform of the benefits plans.

It’s important to note that they are overall poor reforms and should have been nullified by the German money value shifting due to the knock off effect on the saving rate. This didn’t happen because they were put in place at the same time as the Euro and the overall imbalance in the union allowed Germany to keep an undervalued currency. In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since.

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> In effect, Germany robbed all the poorer members of the union to prop up its own economy something it has kept doing since.

Those who like to bully the poorer members of the Union on the grounds that they're being bankrolled by the the wealthier states would be wise to take note of this, and take a more intelligent and informed view of EU "subsidies". The idea that the wealthier member states are showering these countries with funds out of the disinterested goodness of their hearts is not only ignorant of how these cash flows actually work in the grander scheme of the movement of money, but also preposterously naive.

The power balance is shifting in Europe against this crypto-germanocentrism, however.

This sentiment is so common in Germany. Everyone blames the European "south" for Germany's problems as if Germany was some sort of hero doing all the work.

The Greek economic crisis is a classic example. German banks mess up when they lend too much money to Greece, Germany does a bailout for "Greece", the money actually goes back to German banks. Then people have this perception as if they somehow paid for all the social services bought with the borrowed money. No, Greece is still in debt. You might complain about forgone interest but that is on the lender, who is not doing his job properly.

Why are you only talking about the lender's fault when it comes to bad loans.

Because assessing and assuming risk is literally their entire reason to exist.

Why doesn't the borrower assume responsibility for taking risky loans?

Loan me 100k and find out

Because that's literally the job of the lenders.

It's important to note the other side of the medal: Today's inflation is to a large degree caused by the expansionist money policy that was necessary to prevent a Greece financial collapse (which would have undermined the Euro as a whole). Greece financial problems were, at least to a significant degree, caused by debt-financed social expenses that are unheard of in Germany. So the conclusion that German workers are financing Greek's early retirements is not completely bullocks.

It's very important to understand that Greek's government also played the "Germany is at fault" or "Germany has to pay" card very effectively, when Germany's government played the "Lazy Greeks" card to justify their own fiscal policy.

Let's not absolve Greece of fault. They massively lied on their data to join the euro with a financial situation that was obviously not going to work in the long run. No way would Greece have gotten as much money in the 00s had they published their real data.

That said, the German opinion on Greece was(is?) pretty fucked yeah. Especially if you look at how often we ignore the situation for the average Greek in these discussions. A shitload of medically necessary operations were cancelled in the downsizing of the Greek state, even the democratic nature of the state itself was seized by the troika.

And Greece never really got a bail out, all they were ever offered were just bigger and bigger loans. (with austerity measures attached that pushed down demand, when lowered revenues, that made it harder to pay the loans)

Why should the reforms be nullified by a change in saving rates?

Hartz IV reforms pushed unemployed people back to work by reducing long term unemployment benefits to 400 EUR + rent. This certainly reduced purchasing power first (by reducing available money) but also quickly freed up social spending as employment rates soared.

That’s a classical and expected corollary to social dumping reforms intended to boost competitiveness. There is less money invested inside your own economy (that’s what the saving rate is) as you have intentionally made people poorer which leads to an influx of foreign capital propping up your currency and nullifying the advantage you were expecting on the international market.

As mentioned before Germany whose economy is extremely unbalanced and wouldn’t be viable if it used its own currency was shielded at the cost of killing the competitiveness of the poorest union members.

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