Germany's trade surplus is a problem
brookings.edu
brookings.edu
I keep reading about how Germany's "zero debt" economic policy is bad for the country, and how bleak Germany's future is. That is, everyone seems to agree on this... except for the Germans, who say nothing about it while they continue being one of the top 5 economies in the world.
Lots of these analysis come from the US, which to me makes even less sense: why would anyone listen to the country who got paralyzed when they couldn't keep getting even more in debt? How come George Soros can suggest[1] that Europe should go to war against Russia as a mean for stimulating the economy, and do it with a straight face?
Every article seems to suggest that German economists are a bunch of amateurs who don't know what they are doing. But from my layman's point of view, it certainly doesn't look that way.
[1] http://www.nybooks.com/articles/archives/2014/nov/20/wake-up...
Edit: changed 80 to 50. Not sure where I saw that number.
It only seems to be a bit more than 40%: http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS
Germany has a GDP of 3 Trillion Euro.
It had exports of 1 Trillion Euro.
Even Greece. Totally overblown. Greece is a tiny country. Its GDP is half that of Bavaria.
Staying in the top 5 means maintaining growth. Growth can be domestic or from exports - Germany could either keep depressing local wages, thus furthering exports, or stop depressing local wages and neglecting infrastructure and education, thus furthering domestic growth. As I understood it, the argument of the critics is not about growth, its pointing out that Germanys export strategy creates massive collateral damage both in Gemany and in the Euro zone.
> Every article seems to suggest that German
economists are a bunch of amateurs who don't know
what they are doing. But from my layman's point of
view, it certainly doesn't look that way.
Quick explanation: If you have weak currency, it's great for export, since stuff produced here is cheaper than elsewhere. And if currency is strong, then that favors imports, because your currency buys more in outsider market than in yours.
However the more you export, the more valued currency becomes and the more you can buy with your currency, which leads to increased import. But Germany doesn't need to ever grow its imports, because they have other countries like Greece, Italy, etc. to drag the value down.
What Germany is doing is eating its cake, having it too, at expense of other states and then blaming them for not having any cake.
Because Germany doesn't import enough, other countries can't recover and to make matters worse, they can't export since German products based on Euro and of higher quality and equal price.
Germany has been running an export surplusses for decades. With the Euro and without.
In essence, yes they had, but not as growing as this one.
Germany was the world's largest exporter for several years. Now it's no longer.
> In essence, yes they had, but not as growing as this one.
Germany got more people now after reunification, built brand new production facilities in East Germany, built new production in Eastern Europe, got new markets, ...
Germany is trying to save the Euro zone, not tank it. The US-based economists claim that it is possible to spend money (take on debt) to kick-start an economy and then recoup that money by increased tax earnings. It turns out that doesn't work any longer. Plus, many contries worldwide are already paying interest on their debt with new debt. And they have zero margin to increase taxes.
Some countries (including Germany, but not including the US) can still make it out of that downwards spiral. The question is no longer, whether the EU will tank. The question is which of the EU, the US or China will default first on their debt. The results will be devastating and capital will flee to the non-defaulted economic blocks.
This is a big political game played over decades. And media-based support of one or the other school of economics is part of it.
Go look it up, the governments of Italy, Spain, etc except for Greece weren't borrowing beyond their means. What they were suffering from was out of control inflows of cash. Inflows of cash in a country with it's own currency tends to be self limiting, because as money flows in the exchange rate adjusts making investments less attractive. (A country with a well run central bank will actively adjust the exchange rate to prevent the inevitable panic and flight that happens at the end of a bubble, or you have a bubble and it sucks for a while)
Part of the problem with the Euro is weaker member countries can't control the flow of capital into and out of the country. Yet they are on the hook for the mal effects that result.
This is wrong.
Capital inflow is due to a trade deficit, that is to a large part financed by government debt (taking in money from abroad).
This kind of things are easily solved by quantitative easing. You can always print more money in order to down-keep a currency to what may be considered "the right price". The real problem is not a currency's rise, it's its fall.
When they finally saw that the position became untenable, it gained over 20% on the Euro overnight (and so did many public and private loans in Austria and other European countries that had banked on the low interest rate of loans in Switzerland)
In fact, French fear (or envy?) of the Deutsche Mark in the 80s and 90s lead to a legenday discussion between a german and a french state official: "We have to talk about the threat of german nuclear weapons, too!" "But we germans have no nuclear weapons!" "Yes you have. You just call it Deutsche Mark!"
http://www.spiegel.de/international/germany/the-price-of-uni...
With the Euro, the currency policy is now made by a European institution by Europeans, in Frankfurt at the ECB.
Trading is easier because of a larger market easily accessible: the EU, the Eurozone, Eastern Europe, ... Before that it was slightly more difficult, but still the industry did very at exports.
> That plan has hugely backfired, boosting the struggling german economy after the very costly reunification in the beginning of the 20th century.
The economy has been boosted because Germany got after the fall of the wall a huge new market: Eastern Europe. Right next to its door. In the EU, in the Eurozone.
Since a lot of German exports are to the Eurozone or to countries which have currencies following the Euro, much of that is not depending on a favorable exchange rate.
* US with heavy debts?
* Germany with savings?
Germany is in a position to fix its infrastructure, but then again, this can wait until there's a need for job creation.
Also, outstanding tax 'reforms' are more a symptom of weak political influence by corporations, which is a good thing.
Germany isn't the US, and for this reason, it is rich.
Edit: punctuation
If I may quote Greenspan: "That all of these claims on government are readily accepted reflects the fact that a government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.
* Germany with savings? >Germany is in a position to fix its infrastructure,
Nope German infrastructure is in ruins. She does not have any savings. She has Lehman debt obligations, Greek government debt and billions of unpaid retirement obligations. She gives its products away for free.
> Germany isn't the US, and for this reason, it is rich.
The average American is richer than the average German.
Neither too much export, not too much import is good. BOTH is a sign of weakness. The best country is one that exports a tremendous amount but has an close to zero account deficit.
Yeah, sure. I happen to live in Germany and I don't see to many ruins. Actually the city where I live invests a billion $ into a concert hall and 1.5 billion $ into a new X-ray research laser facility.
http://en.wikipedia.org/wiki/List_of_countries_by_Internet_c...
Go to East Germany. They got the new roads. Brand new autobahns.
I live in West Germany and an Autobahn is not far away. First class. The surface has just been renewed with a more silent asphalt.
It's not the highways themselves. It's primarily bridges and side roads that are affected. Schierstein Bridge, for example: http://en.wikipedia.org/wiki/Schierstein_Bridge
> The internet infrastructure in Germany needs work as well: It currently ranks below Russia and Hungary, far below countries like Sweden, Netherlands and the US.
That's extremely misleading. Average download speed not only is a very poor metric for infrastructure, but depending on which chart you look at, you may be getting pretty much the opposite results. For example, check out Netflix's internet speed report [1].
In practice, the internet infrastructure in German is generally excellent in cities and metropolitan areas. The primary problem (same as in many other countries) is coverage in rural areas. The issue here is not lack of government investment, however, but forcing ISPs to invest money in these not very profitable markets. Despite subsidies and incentives, this is still facing obstacles. That said, the situation has improved considerably over the past years [2]:
"Germany remains above the European average in all technology combinations, with noteworthy improvements in overall NGA coverage recorded in 2013. Near-100% coverage of overall broadband and 97.5% coverage with fixed technologies were reported in 2013 as well. NGA access rose through the year, ending the period on 74.8% of households (21.3% in rural areas) – nearly 9 percentage points higher than the previous year."
[1] http://ispspeedindex.netflix.com/
[2] https://ec.europa.eu/digital-agenda/en/news/study-broadband-...
Since 2003 the invest into infrastructure is net-negative: https://www.kfw.de/PDF/Download-Center/Konzernthemen/Researc...
Next surprise: we have a lot infrastructure and it is expensive to maintain. Look how many airports we have nobody needs.
Next surprise: in places we need more infrastructure. We are for example investing a lot of money into the energy system. Or transport.
German universities? Third class.
Transport system? Bad. Don't even think about how slow the ICE trains in Bavaria run.
Bridges? Many are overdue for reconstruction.
I would have to look up in how many years (hint: very few) Germany expects a doubling of cargo freight traffic. Impossible without massive investments in infrastructure. Look at many train stations. Offenbach, Heidelberg, Wuerzburg. OMG!
Internet? Slow because bad infrastructure. (China is different there. Regarding the internet they like shooting them-self in the balls)
Energy? Stupid investments in solar infrastructure instead of research. They subsidize Chinese manufacturing and take the money from the poor (high costs for electricity). Wind energy? Produced there, where it is not needed.
Last but not least, the 1 BILLION into a concert hall for rich people that was supposed to costs 35 or 70 MILLION is a sign of stupidity and corruption but not a sign of a "healthy infrastructure investment"
The net mean wealth per adult in the US is upwards of $350,000 to $400,000. In Germany it's half that.
The net median wealth is roughly equal (especially after US housing values have recovered, and the stock market is near all-time highs).
Germany only has $50,000 in net median wealth per adult. They are not that rich. France by comparison is nearly three times that; Belgium is three times that; Australia is four times that; Italy, Japan and the UK are over twice that.
Total assets in the US are upwards of $200 trillion according to the Federal Reserve. Household assets alone are nearing $100 trillion (~$80 trillion net after liabilities).
Wealth in the US and Germany is totally different. The US invests in the stock market, the value of companies is extremely high ... it's just a fictional value.
Roughly 20% of household US assets are held in equities of any sort. Values are modestly elevated, but not dramatically so. The S&P 500 pe ratio is 20, historically the median and mean are both near 15; the S&P is likely elevated a mere ~15% above a normal range (representing approx. $3 trillion in asset value for households, or a mere 3.x%).
Besides that, there's nothing fictional about Apple generating $50 billion per year in profit and being worth $733 billion.
Or Deere generating $3 billion in profit and being worth $30 billion.
And on and on for thousands of other companies that also are anything but fictional.
Check out Germany sometime. It does not look or feel a lot poorer.
All assets are valued by speculation in some form or another. Saying the stock market is driven by speculation does not lessen the fact that the value of the companies is real - as real as any other asset you can name. All assets on earth are supported by the same confidence requirements of buyers and sellers as equities are.
What asset would you list in Germany that is somehow more real than publicly traded companies in the US? Euros?
A stock certificate for one share of Berkshire Hathaway A shares, is as legitimate a value as the cash in your pocket or any other asset you could possibly name.
The US is the world's second largest manufacturing economy, and was only passed by China finally a few years ago.
It's just that Germany is manufacturing more, per capita.
Further, storing wealth in domestic property is a poor use of money.
Edit: If you look at countries by net financial wealth per adult, a quite different picture emerges.
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
It's clearly a perfectly good use of money. It has assisted the US in acquiring a median net wealth as high as Germany, while having four times the population, a very challenging feat.
The only competition which I can see per capita wealth lists equating to a national advantage is for general growth. There is reason to question what value growth brings to people day to day. My impression is that a society in decline demographically is forced to answer to something more than peoples purchasing power alone which might just make for a more livable society. Or put simply: a system that has to worry about more than just growth tends to be one concerning itself at least slightly more with peoples quality of living.
You will notice that in Germany there are way fewer poor people than in those other countries. The worst off people in Germany are more healthy, happy and hopeful than in the US or Belgium or France.
The fixed exchange rate 4,20 DM == 1$ in the 1950s is usually cited as helping German exports during the 1950s. During later decades the Deutsche Mark was exceptionally strong, in theory harming German exports.
It's a fallacy to pick and choose events in the ultracomplex global economy and form a story from that. Consider all the fiscal and monetary policies that were enacted by all countries - ultimately success of an economy depends on the intrinsic strength, regardless if it's export oriented, or if it lives happily with a trade deficit like the US.
I am reading Varoufakis' Minotaur book at the moment. I am about halfway in and I haven't yet gone 'hang on a sec, that can't be right!'. So he's got that going for him.
The Germany economy is successful if the Euro is low and it is successful when the Euro is high. It makes no difference. The companies will adjust to what ever Euro exchange rate there is.
It's just that Germany has invested a lot into building new markets (for example Eastern Europe, which is just next to Germany), less so into consumption or Trillion $ wars in Iraq.
You are probably right but, this has not prevented the Germans (or, at least, the German press) to create a narrative of how the current situation is due to how lazy the Greeks and the south Europeans are.
I suppose that they have build a congruent worldview that lets them to sleep well at night.
I can't remember reading about "lazyness" - maybe you read too much into it? However the press had a look into the financial conduct of Greece - I hope that's allowed when you're out 50 Billion €?
...which Varoufakis talks about extensively in his book. You would know that if you actually read it.
Essentially he splits the world economy post-WW2 into two phases: The Global Plan and The Global Minotaur. The second started (roughly) in the 70s, when US was starting to become a deficit country. This is when the US strategy vis-a-vis Germany and Japan changed. Of course it's more complicated than that, but that's the gist of it.
> At least he has build a congruent worldview that lets him sleep well at night.
If you are gonna be an armchair critic, please be an well-informed one and read what you are commenting on.
"You would know that if you actually read it."
Key is, I knew it without reading it, as the topic is already ultra-well researched. The onus can't be on me to read his book, in particularly coming from that author: Wouldn't he likely be the most biased person on the planet in this matter? Objectively, giving him all the credit (heh...), wouldn't such a book be primarily a political statement of a man under immense pressure? A tool to put some narrative to support his politics? Big words like "The Global Minotaur" would make it seem like it is.
Basically, the article discusses the global effects of "global imbalances". The author does not say Germany is to blame for Greece's problems.
Export exists, because someone outside of Germany thinks goods from Germany are better then goods from their country.
How to solve this problem? Go and produce better goods urself, instead of crying to Germany to make their goods worse.
Thus the south of Europe is trapped in the Euro as they do not increase productivity as much as the north and in some product cases does not make as good products as Germany.
The European politicians has pretended that all of europe are equal in productivity.
The german wants to sells cars in euroes, but you do not want to support the south permanently financially.
This is like going against the tide, its a matter of time before the Euro will fall.
I just hope Europe will unite in peace after that event.
And even so, the politics of the poor regions have gotten so toxic that many of us in the rich regions wish we didn't have to carry them anyway.
Worth noting that Sweden is in the EU but they maintain their own currency, so that is always a viable option for any country imo.
The real problem is that the German export sector is benefiting enormously from having a currency that is tied to economies that have high levels of debt, creating huge problems in other Eurozone countries on the periphery (removing tools from policymakers like devaluation), making it more difficult to reduce unemployment and drag themselves out of recession.
Not everyone can be a big exporter like Germany by definition, some countries must be net importers.
We wish economy was so simple.
Goods from Germany are better than goods from their country, and the price is good, and they can afford it.
How is that even possible? Where is all that money used to buy Germans goods coming from?
But, wait.. if they don't loan the money, who is going to buy their goods?
Exports exist because they are cheaper. And they are cheaper because local wages in Germany are depressed. And because local wages are depressed (e.g. they grow slower than GDP grows) we suddenly have a whole load of economic problems in Germany (I'm German, too, btw).
Have you ever asked yourself why both the public pensions and public health care suddenly could not be financed anymore? Because both are tied to real wages, e.g. health care is about 15.5% of your gross income. But if wages stop growing in line with GDP (and inflation), the absolute amount of euros available for health care and pensions shrinks. We have a whole boatload of problems in our domestic economy because of that focus on exports. So you and I are paying for Germanys exports with a bleak outlook into our own future. And thats what the criticism is all about: Most have no problems with German exports, they are criticizing the lack of imports that would offset the exports.
First, the problem is how absurdly low the wages have fallen in Germany compared with the 'productivity' gains leading to highly profitable exports.
Second, a problem seams to be as well how Germany was actually ignoring the fact that it is a part of a larger interconnected economy.
Both problems are already discussed at quite global / high levels and are tackled by institutions more proficient with these issues than the "schwäbische-hausfrau" who tends to be quite proud of _efficiency_ and _austerity_ but at same time misses the larger picture of global economics.
I think, it's not a bad idea to let world recover after the financial crises in steps. Now with USA and Germany quite on the track the rest of Europe and the World can be guided out of the trenches... one after the other.
One problem is the communication ofc ;) How to make the "schwäbische-hausfrau" understand all of that plus the fact that 'economic-growth' or rather 'economic-development' (which i find to be the more fitting word) in the magnitudes we were used to in the last 30 years will not come back for a long time...
tldr: Germany is still super. But will need to share its wealth more evenly internally and externally to benefit even more ;)
(edit:typo)
Trade imbalances are simply not sustainable, regardless of direction.
I used to be very interested in economics but have grown more and more frustrated with the entire field. I pretty much stick to stuff that's interesting for other reasons (multi agent based modelling, chaotic systems, game theory etc.). As an academic in another field the entire field seems pretty strange. Conflation of politics and economic theory is wide spread and there seems to be a lot of "friend helps friend, outsiders suck" like structures in place. Granted this is the case in academia in general but economics always struck me as rather extreme in that regard.
This is a reflection of the following identity:
Current account = Savings – Investment
Basically, Germany is over-saving and both Germany and its trade partners are worse off because of it.
[1]: http://krugman.blogs.nytimes.com/2013/11/01/more-notes-on-ge...
In any case, it's locally possible to invest more (in nominal terms) than savings, both because money supply is increasing and there are always local imbalances.
Typically, interest rate differentials take care of this in a free market. Reducing the interest rate in Germany would be one cure, another one would be hiking it in the importing countries. So I don't see the blame at one side only.
- Make sure they have some savings to fall back on
- Moving their Euros into bricks and mortar
They are careful with their private income and suspicious of debt.
When I look at my fellow Brits in the UK living on their credit cards and month-to-month on their Wonga loans, I'm starting to realise that the Germans might be onto something.
One thing is quite obvious. The German mentality for cautiousness is not going to change any time soon.
Differences between the UK and Germany:
* Unions are very weak in the UK compared to Germany. Union reps sit on boards of major German companies, negotiate wages that get workers a better deal
* Germany's infamous mittelstand provides good technical jobs when compared to the UK which depends heavily on an unstable banking sector to bring in tax revenue
* Germany doesn't have the same crippling real estate market as the UK and has stronger tenants rights, long leases when renting
* Germany's benefits system is much more generous than the UK's
This one is certainly untrue, most Germans rent
http://en.wikipedia.org/wiki/List_of_countries_by_home_owner...
It's certainly true about debt, you have to have cash with you always in Germany because sometimes a shop accepts Visa/Mastercard, sometimes EC Karte (German banking debit card), and sometimes neither. You can rarely predict which is going to be the case.
Having recently purchased property I can confirm that the market is quite crazy at the moment.
That aside, I "feel" (based on living in Germany) that Bernanke is correct with his suggestions of where Germany could move. I don't think it will have much impact on the trade deficit but it will help Germany avoid more drastic emergencies in the future. The pay for workers is out of balance. The investment in infrastructure is not required now but important for its future. Currently it's infrastructure is far better off than other EU zone countries of similar size (and many times better than the US). But if it wants to retain it's significance 20 years from now it will need to innovate in infrastructure or be satisfied with being that country known for making old-world things at good quality. Germany definitely needs policies that encourage investment. Ideally though I'd prefer that not be in housing as stable housing is probably one of the primary social benefits in Germany. But as it stands with its undervalued assets it's becoming a place to be bought by others. Politically this creates interdependence which is NOT a bad thing but ultimately as the undervaluing continues Germans are just throwing away that value as value lost. In a globalized economy if they do not capitalize on it someone else will. Still, none of this will do much for the trade deficit. Because while it may take 20 years for Germany to push some of these changes, change within other EU countries to take advantage of it will take significantly longer. Then again, I'm not an economist so what do I know.
Anyway, I don't think there are absolute rights and wrongs in this game. And a game it is, the outcome of which is quite uncertain. The players (i.e. nation states and larger economic entities such as the EU) in this game sometimes act as opponents, sometimes they cooperate but unfortunately they're hardly friends with a common goal or the greater good in mind. Germany's zero-debt policy might very well prove to be the right one once the next few rounds have been played.
Bernanke's criticism has some merit, though. Certainly, Germany's economic policy currently severely disadvantages other EU countries and benefits from their weakness. That definitely is a problem. However, this weakness also is largely self-imposed by corrupt politicians or generally wide-spread corruption. Greece for instance, economically shouldn't ever have been admitted to the Euro but it was nonetheless because of political reasons. This doesn't mean German politicians or Germans for that matter have any right to be condescending towards other nations as they sometimes come across recently. There's corruption and tremendously wasteful spending in Germany as well. Maybe it's just not as severe as in other countries but Germany hardly is a paragon of economic virtue itself. However, they can hardly be blamed for trying to achieve the best for their country first. Why should they draw up economic policies that benefit other countries which - without any accompanying political change on their part - would likely continue as before. Their crisis primarily isn't caused by Germany's strength but by their comparative weakness. On the same grounds Bernanke could advise the US the cut their grotesquely large military expenses and donate some of it to Greece so they can pay off their debt. Not bloody likely either, I suppose ...
That said, Germany is a tremendously wealthy country that could spend a lot more on infrastructure if it wasn't for large amounts of taxpayers' money wasted on pointless stuff and corrupt structures. There have been talks about a proper tax reform for more than 30 years now and by and large nothing has happened. If there's one point of criticism that can be justly made it's that German politics is lacking a vision and is largely guided by cowardice and unwillingness to assume a leadership role. Some of its success in recent years probably was mere luck.
“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”
-- Charles Dickens
1. Is the trade surplus mainly affected by private enterprise? If that's the case, what control does the German government have over it if the businessmen running the companies would rather save than spend? (Interest rates are already incredibly low.)
2. I'm personally conservative with money, and never like to get into debt, so from a this naive point of view, I would be very happy to know my country has a large buffer to weather out any oncoming storms. Assuming that Germany's position (saving) is bad for the world economy, but good for Germany, what would make the Germans change their behaviour?
3. What books would you recommend for a complete newcomer to learn about macro economics?
http://www.amazon.com/Economics-One-Lesson-Shortest-Understa...
1. > Is the trade surplus mainly affected by private enterprise?
Hell yes.
> If that's the case, what control does the German > government have over it if the businessmen running the > companies would rather save than spend?
Good question. They could put export tariffs and forbid the immigration of "highly skilled labor". (If you make at least 30k Euro you get a work permit immediately. If not, just ask for asylum and you get better benefits than most pensioners.) It could abolish export financing and government guarantees for export financing.
2. > I'm personally conservative with money, and never like to > get into debt, so from a this naive point of view, I > would be very happy to know my country has a large buffer > to weather out any oncoming storms.
It is impossible to save money without someone else going into debt. Germany is not creating a buffer, it is exporting both, capital and goods. She does dumping with salaries for engineers and exports like crazy. She has too, since there is not enough money people can spent in Germany since the salaries are so low. At the same time, "Germany" is not getting any financial buffer. She gets Lehman debt obligations and Greek government debt. Germans take pride in being the leading exporter of goods. They better would take pride in "giving away products for free". But in fact, there is someone profiting: Private, highly export oriented enterprises. And there are three kinds of people footing the bill:
1. Employees that are highly underpaid. 2. Tax payers that will have to foot the bill for the bail outs. 3. Citizens that see there infrastructure, universities and public services crumble.
In short: Germany is exporting itself to death.
3. > What books would you recommend for a complete newcomer to learn about macro economics?
Hm. Hart to say. There are so may. Mises, no matter what you think about him, is good for an introduction. But later you will realize that he failed in most things. Keynes may be right. In the end, we are all fucked.
"There is No Steady State Economy (except at a very basic level)" http://ourfiniteworld.com/2011/02/21/there-is-no-steady-stat...
Limits to Growth–At our doorstep, but not recognized http://www.resilience.org/stories/2014-02-12/limits-to-growt...
Wealth And Energy Consumption Are Inseparable http://www.declineoftheempire.com/2012/01/wealth-and-energy-...
Galactic-Scale Energy http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...
I think much of your question can be answered by this piece: http://foreignpolicy.com/2013/05/07/no-the-spanish-cant-be-m...
In short, prolonged trade imbalances are mostly because of policy reasons, in this case suppressed German wages, and individual preference or things like "hardworking culture" are most likely results instead of causes.
2. The assumption that Germany's high saving is good for Germany is debatable. If Germans save more than they consume, some other nation must consume more than they save. Germany has been, and might be again in the future, forced to bail out those countries.
3. I can also recommend the Khan Academy lectures on economics.
2. But isn't Germany's position at the moment infinitely preferable to Greece's? Obviously the situation would be better if no bail outs were required, but if they are, I would much rather be the country with the surplus.
3. Good idea, I've watched a few already but should continue.
Is the position of the man on top infinitely preferable to the position of the other? Absolutely!
Is that an argument for acting as the man on top? I wouldn't say so.
Germanys government could keep maintaining infrastructure, stop depressing wages (indirectly of course), increase ressources put into education (education % of GDP is less than 2/3 of % of the US GDP), among others. That would increase domestic growth, thus lead to a relative decrease of the relevancy of exports. The main problem in the Euro zone is not the exporting of Germany, its that imports are so low.
> 2. I'm personally conservative with money, and never like to get into debt, so from a this naive point of view, I would be very happy to know my country has a large buffer to weather out any oncoming storms. Assuming that Germany's position (saving) is bad for the world economy, but good for Germany, what would make the Germans change their behaviour?
Your position seems perfectly reasonable, but surly you also invest/save for you retirement? Thats what Germany currently isn't doing: The hidden debt Germany is currently building up is e.g. neglect of infrastructure and future lack of specalist employees. That cannot be seen in the books, on the contrary less investment in infrastructure means less monetary debt, so on the surface everything seems fine right now.
Furthermore not every country in EU is "suffering from Germany's export surplus" - countries like Estonia, Poland, Norway, Sweden, Denmark, ... are doing pretty well and doing better.
What countries are supposedly suffering?
- Portugal
- Italy
- Greece
- Spain
... aka the PIGS states - have a look at their economic and political history and you will notice they were all ruled by incompetent and corrupted governments.
Berlusconi is still active in policts ... do I need to say more? A lot of countries in EU have issues not due to Germany but due to their very own problems.
Yes, governments that EU and Germany support because they only care about them doing what they want in foreign arena, regardless of their domestic politics.
shouldn't it be the other way around?
why not go through Germany state policies and copy working ideas over to other countries?
telling germans what to do sounds like a joke, people should learn from them, not teach them how to do things.
People, especially economists, love to make macro economy some big mystery (no doubt so that they seem important) when it really can be solved the same way it can be solved on a smaller level.