So many things haven't made sense to me lately. High up on the list is the crush some pundits now have on Germany.
Harold Meyerson sent in a love letter today:
Mixing social democratic values with Jimmy Stewart localism, Germany's economy is running rings around America's.
Really?
Yes, there is a lot to respect about the German economy. Great cars, disciplined workers. Tight wad consumers. Lots of exports. Germany runs a bigger trade surplus than China!
A closer look at Germany shows there are some problems with the "we should be more like them" narrative.
To begin with, wages in Germany have barely budged since 1999 and, adjusted for productivity, actually fell between 2001 and 2007.
Germany's economy also fell further in this crisis -- almost 5% in 2009 -- so it's rebound looks better by comparison.
And what about that trade surplus? Germany is effectively betting its future on other countries continuing to live beyond their means. After all, everyone cannot export their way to wealth. By definition, if Germany (and China) run huge trade surpluses, other countries must run huge trade deficits (the U.S.) But, as we have seen recently, things that can't last forever stop.
German productivity outside manufacturing is low. And productivity per hour worked is lower in Germany than in . . . France! (Did you see that coming?)
Yes, German unemployment is now lower than ours, but let's not talk about the 10%+ unemployment stretching back to the 90s.
German banks have also invested a boat load of money in Greece. Not looking like a great idea now.
Stagnant wages, export-driven, banking sector at risk . . . Germany is not the best model in the world for the U.S. to emulate.
Source: http://www.pbs.org/nbr/blog/2010/11/germany_really_its_not_the_rig.html
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