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Comment by steveridout | Hacker News Reader

I'm still woefully ignorant about world economics. Could someone do me a favour and answer a few basic questions about this:

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?

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> 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.)

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.

There's a lot to economics, one book that I think is really insightful and quite easy to read is Economics in One Lesson. It's main function is to highlight second order effects, or unintended consequences, of legislation on activity.

http://www.amazon.com/Economics-One-Lesson-Shortest-Understa...

1. Higher wages would lead to more expensive (and therefore lower) exports, and to higher consumption, leading to higher imports. The government can cause wages to rise by raising the minimum wage, raising the salary of its employees, and hiring more government workers (e.g. for infrastructure projects).

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.

1. True, that makes sense.

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.

Suppose two men are in a lake, and one man is on top, pushing the other man down below the water surface.

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.

I would recommend you to follow Michael Pettis[1]. He used to focus on China but recently also wrote about Europe. I find his explanation convincing but by no means is his view the consensus amount economists.

I think much of your question can be answered by this piece: http://foreignpolicy.com/2013/05/07/no-the-spanish-cant-be-m...

[1]:http://blog.mpettis.com/

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.

Easy

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...

Curious to know why this was downvoted?

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