tag:blogger.com,1999:blog-2546602206734889307.post7903256370030094672..comments2024-03-19T09:54:37.187+00:00Comments on mainly macro: What is it about German economics?Mainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger95125tag:blogger.com,1999:blog-2546602206734889307.post-43592508794965854522015-11-24T10:26:39.560+00:002015-11-24T10:26:39.560+00:00The world can be divided into "demand givers&...The world can be divided into "demand givers" and "demand takers." In the post war world Germany has always been and sought to be a demand taker. Since at least the early 1970's the German position has been that advanced countries should run surpluses which can then be recycled to provided investment funds for developing countries. This was their rebuttal of US attempts to put forward the "locomotive theory" in the 1970's.<br />The German position is a very convenient one for them. It removes any obligation on them to sustain demand. That can be left to others, especially the Americans.<br />It also fits in with a very strange sense of causation which often crops up in German economic discourse. The best known is the idea that inflation caused the success of the Nazis, when it is clear that the real source was the Depression. But there is a more recent example. In 1978 Germany gave in to pressure and did a 1% fiscal boost. Shortly after there a jump in inflation and deep recession. In German economic discourse the fiscal stimulus is blamed for all this. In fact of course the Iran-Iraq war sent oil prices through the roof. Gobanianhttps://www.blogger.com/profile/06624944704653618487noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-75914659191512004462015-07-24T14:08:53.450+00:002015-07-24T14:08:53.450+00:00Quote:
"It should, at least in principle, be ...Quote:<br />"It should, at least in principle, be a positive sum game."<br /><br />It "should", because you say so? Well, thing is that in the REAL world it largely isn't, whatever you think it "should" be. Quite by definition, in competitions there are winners and losers, I would say. And in competitions the wise things to do if you want success tend to be exploiting exploitable things, I would say.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-47395108890495809102015-07-08T14:59:39.757+00:002015-07-08T14:59:39.757+00:00Prof. Wren-Lewis's comment of 10 June at 3:50,...Prof. Wren-Lewis's comment of 10 June at 3:50, together with Tommi Uschanov's comment of 9 June at 9:34, prompt this thought: perhaps the reason Germans and Finns (Finland had a Nazi-allied government early in World War II) do not now look upon Keynesian policies favorably is that in 1930's Germany, the economic policy of odious fascists was very similar to "military Keynesianism" (which was not supported by John Maynard Keynes himself).Gabriel A. Lozadanoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-58659321533112880402015-06-16T16:15:21.943+00:002015-06-16T16:15:21.943+00:00Why there is no, or very little Keynesian thought ...Why there is no, or very little Keynesian thought in German?<br />Keynesian thought is about the importance of demand for a prospering economy.<br />There is no recognisance of the importance of demand in Germany! Why?<br />Because in German thought consumption is a sin.<br />In a normal sense, production is a means to consumption, not so in German. In German production is an end in itself. <br />In an private conversation with an older philosophy professor, he ask me about Keynesianism: (the question was meant serious)<br />"How could we get wealthier, if we consume more? I never understood this."<br />If you want to get wealthier, you have to work more und consume less.<br />In German we have a lot phrases, connoted with "Werk" (work?), all of them are emphatic. <br />So Keynesianism is against deep feelings.<br />In the "Keynesian moment" after the Global Financial Crisis the government introduced "Kurzarbeit", which holds the worker in employment. This was uncontroversial. (Worker should work) <br />And the government introduced the "Abwrackprämie", an incentive to buy a new car. This was told to be waste.<br />Second:<br />The emphasis to work (Werk!) is associated with "Treue" (loyalty), loyalty to the master and to the goverment. There exists the word "Werktreue" (loyalty to the work). Read "Heinrich Mann, Der Untertan". (Translated into English under the titles Man of Straw, The Patrioteer, and The Loyal Subject.)<br />"Werk" and "Treue" mean: You have to serve, if you want to get wealthier. There is no original liberal (libertarian) tradition in German.<br />Think over the title "Ordoliberalismus". "Ordo" derives from medieval Scholasticism (Ordo universi) and means "Gods universal order". There is no liberalism in the anglo-saxon sense in this.<br />Greeting from German Christoph SteinAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-69271439042511766332015-06-15T03:26:53.626+00:002015-06-15T03:26:53.626+00:00IMK is a paid pro-union lobby group, not an "...IMK is a paid pro-union lobby group, not an "island of Keynesian thinking".Henry Kasparhttps://www.blogger.com/profile/01775593288758332686noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-30193427869920408962015-06-13T07:54:29.226+00:002015-06-13T07:54:29.226+00:00Anonymous10 June 2015 at 12:28
Indeed - what is y...Anonymous10 June 2015 at 12:28<br /><br />Indeed - what is yours?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-66635961981476463212015-06-11T10:10:02.332+00:002015-06-11T10:10:02.332+00:00Geany practices Keynesianism but to other countrie...Geany practices Keynesianism but to other countries they adwise neoliberalizm in order to advan e merchantilist goals.<br />germany had a much larger fiscal stimulus then visible by looking only at public deficit. Germany hid a stimulus through its developement bank AfW providing low interest loans(0interest) in amount of close to 80B euros. Developement bank spending is not counted toward public debt.<br />i would advise as Do as Germans do, not what they tell you that should be doneCritical Tinkererhttps://www.blogger.com/profile/08540226813192385645noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-88178577458259157382015-06-11T06:41:41.899+00:002015-06-11T06:41:41.899+00:00"Current German economic policy is centered a..."Current German economic policy is centered around export competitiveness."<br /><br />This has been a popular line for decades taken by the MIT Dornbusch/Fischer etc open economy crowd. I am sceptical. They said the same thing about Japan.<br /><br />Actually, Japan had overvalued exchange rates for much of the high export growth economy. The DM was also a very strong currency. If they were really prioritising export competitiveness they would not want a strong currency. <br /><br />Export competitiveness is a result. It is a result of a well run economy. I think the corporatist wage fixation system is key.<br /><br />It would be good if we had sociologists on here familiar with how this and Germany works. Why isn't he we cannot have such a wage bargaining system in the UK and that we have such hostility between labour and capital? This would enable us to think beyond Model.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-10246167399168975882015-06-10T22:22:58.876+00:002015-06-10T22:22:58.876+00:00I think German academia in general has been relati...I think German academia in general has been relatively insular --- throughout the entire social sciences, and even reaching into the technical and natural sciences (probably least in the natural sciences). I think institutions and incentives is likely to be the key: in all of these -- but esp. technical sciences and economics -- there were/are relatively extensive and attractive institutions in Germany offering researchers status, competitive salaries and influence: the economic think tanks, Fraunhofer, BuBa, the Ministries, the famous university departments (famous in G.). So you don't actually have to look outside of G. to find quite a lot of attractive posts. The system-internal reward system then reinforced this insularity. For example, until recently - and perhaps still today - there was limited reward to publishing in international journals. What really advanced your career was getting large outside grants from government or industry. (This is certainly how it worked/works in the technical sciences, I know less about economics.) So in other words, you have a large system with attractive positions, with a reward system of its own. One should in fact expect that to generate its own, somewhat insular discourse.<br /><br />I appreciate your points in Fn. 1, and think they are spot on. But also remember that German manufacturing companies from very early on internationalized substantially. So from the early 90s on German workers saw themselves as in direct competition with Eastern and Central Europe and East Asia. All of that has only grown. So while your point about wage suppression being able to increase demand within a fixed-exchange rate system is true, neither the German economics nor the German business nor even the German union/SPD establishment ever saw itself as mainly part of the Euro- and pre-Eurozone fixed-ex. rate system, but as part of -- and in direct competition with -- a much larger industrial system, and one wherein German labour costs were structurally located at the high end. That is also the reason why the argument you and many others on the Anglo-Keynesian side make about relative wage/inflation growth in the Eurozone tends to get ignored in Germany. People are thinking less about wage developments in the Eurozone, than about wage developments in CE Europe, China, and South Korea. That is where the competitors are perceived to be (both the firms, and the other workers.)NMnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-47743670066025138092015-06-10T20:38:42.497+00:002015-06-10T20:38:42.497+00:00There may be a lot in what you say, and it echos s...There may be a lot in what you say, and it echos some points put to me by others, which perhaps I underestimated at the time (although see footnote [1]!). A point I would add is that Germany has for many years been part of a fixed exchange rate regime, so using competitiveness to raise demand works. (Under flexible exchange rates it should be offset by an appreciation.) <br /><br />As you say, this should not make economics anti-Keynesian, but it could explain why Keynesian ideas could be neglected. I think you have also to explain why German economics appears to be relatively insular, to avoid simply falling in with international mainstream views. That is not an issue I have much information on.Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-11653385401849878492015-06-10T20:17:28.880+00:002015-06-10T20:17:28.880+00:00Simon, I found myself thinking through the issue o...Simon, I found myself thinking through the issue of co-determination and national economic thought further, and arrived at a hypothesis that sees co-determination playing an important role, but through a rather different mechanism to the one you propose.<br /><br />You suggest, if I understand you correctly, that the relatively powerful position the trade unions have in the economy (esp. via co-determination, but also other things), puts the labour-capital conflict at the heart of economic debate, and as a sort of counter-reaction you get a lot of very orthodox neo-classical, anti-Keynesian economic think-tanks and university faculties.<br /><br />Another hypothesis could run like this, placing the centrality that the notion of (export-) competitiveness plays in German economic thought and policy at the heart of our analysis, too. Co-determination involves organized labour quite deeply in management decisions. By definition, firm-level competitiveness is a major concern in these decisions, very much including among the union cadres involved in these decisions via co-determination. So you end up with a union movement that also understands economics heavily (if not exclusively) through the lens of competitiveness.<br /><br />Competitiveness concerns are not per se anti-Keynesian, but they tend to relativize Keynesian concepts. Aggregate demand is no longer the central variable --- supply-side factors become equally important, if not more so (esp. for firm-level union cadres concerned about the jobs in their firm). Thus, also among organized labour and the social-democratic party, the discourse of competitiveness becomes at least very strong (if not necessarily hegemonic), and Keynesian thought if not marginalized then at least somewhat downplayed.<br /><br />Of course, as you will rightly point out, the most Keynesian bastion in Germany is probably the Boeckler Foundation of the trade union federation (DGB). Absolutely true, however I wonder how representative the folks at Boeckler may be -- in this specific regard -- of the wider union and social-democratic cadres. The folks at Boeckler, I suspect, are mainly academics, not firm-level union cadres. They obviously share very many concerns & outlooks, but on this issue there might be greater divides than one might initially think or than may meet the eye.NMnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-69454536525795537142015-06-10T19:56:05.828+00:002015-06-10T19:56:05.828+00:00Brad, I don't think this is about cultural aff...Brad, I don't think this is about cultural affinity -- it is remarkable how strong the appeal to EUROPE! continues to resonate here -- but about the fact that in the East German case, the West Germans basically trusted and had veto power over the institutions receiving the money. In the Greek case they do not trust the institutions (ie., the Greek government, parties and social partners) --- for good reason, IMHO --- and do not have veto power or control over them.NMnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41933278911272418952015-06-10T19:28:19.195+00:002015-06-10T19:28:19.195+00:00Oh Lord, there must be conflicting definitions of ...Oh Lord, there must be conflicting definitions of mercantilism. :-)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-59405034196957122552015-06-10T17:33:56.770+00:002015-06-10T17:33:56.770+00:00You might find some New-Keynesians at the DIW, may...You might find some New-Keynesians at the DIW, maybe its director Marcel Fratzscher who used to sound pretty Keynesian to me, but I've lost track of him and maybe he has joined the hivemind now.<br />As I did on your other posts on this subject, I soberly continue to defend the German economic model for itself, but remain very critical of its policy towards others. Keep in mind, Germany has, almost alone among the industrialzed countries, managed to defend its manufacturing sector in the globalized, i.e. post-Cold War world. This is the German economic model whose failure would imply huge frictional costs to Germans, so the strength of the manufacturing sector needs to be defended. That's why Germans are willing to forego (temporarily) increased consumption for job security.<br />But the schizophrenic view of the German policymakers is that other countries would do best to emulate the German model, which implies that everyone should export, and which implies that Greeks will have less money to spend on German exports. Maybe the root of the problem lies at the logical conclusion of what "should" be: because in the "perfect" world, a consumption-driven Greek economy would buy German goods within a european fiscal union, i.e. Germany would end up sending money to Greece so that they can buy our products. Macroeconomically, it even makes sense, but Germans are left with the impression that they are the "workhorses" AND the "paymasters" of Europe, which is political suicide.Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-14448656758706841612015-06-10T17:21:01.615+00:002015-06-10T17:21:01.615+00:00Schmidt was probably the only self-confessing Keyn...Schmidt was probably the only self-confessing Keynesian german chancellor. He was unlucky to govern at that point. But then, the same global circumstances carried Reagan and Thatcher to power. So this alone cannot be the reason why german economics is different.Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-56361877159470711532015-06-10T17:13:17.907+00:002015-06-10T17:13:17.907+00:00I have read once that Merkel made that argument, i...I have read once that Merkel made that argument, i.e. Germany needs stable finances because its shrinking population will not be able to carry growing debt anymore.Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-3479978200325432442015-06-10T17:10:14.359+00:002015-06-10T17:10:14.359+00:00Maybe inflation aversion only appears stronger in ...Maybe inflation aversion only appears stronger in countries with stronger institutional frameworks. Inflation implies change and institutions are hesitant of changing. The defeated Germany was rebuilt as a federal state with strong regions, strong counterbalancing institutions, i.e. strong chambers of commerce AND strong unions, co-determination, the church also played (or plays) a role. The people might be the same everywhere (and reject inflation), but weaker institutions in the Eurozone periphery might create more inflation.Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-64896831373886455502015-06-10T17:05:37.258+00:002015-06-10T17:05:37.258+00:00I guess Germany's stimulus program was well-su...I guess Germany's stimulus program was well-suited to its economic model, i.e. the protection of its highly skilled manufacturing sector. For example, the Germans came up with the concept that was copied by Obama's "cash for clunkers" program. The purpose was to save the car industry. Similarly, the increase of job flexibility was meant to preserve these jobs, to keep people working within these industries, to conserve the industrial structure. I guess this is the way to go with this economic model. It does not make sense for Germany, and quite possibly for most other countries, to emulate the American system of extreme flexibility, of seizing every opportunity and of disregarding the negative effects of "creative destruction" and disruptive innovations. The Americans can do it with their 300+ million consumers, their lax labour laws, and the power of their military and their lawyers. But hardly any other country can. The UK desperately wants to try, but fails at it, except for the financial "industry".Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-28276240455103679382015-06-10T16:54:37.049+00:002015-06-10T16:54:37.049+00:00Yes, I agree. It is a somewhat unfair comparison b...Yes, I agree. It is a somewhat unfair comparison because of the effects of German reunification.<br />Also, the private debt of the "prudent" Germans is about 90% of GDP, 60 points less than in the UK and 100 points less than in the USA. Alexander Sebastian Schulzhttps://www.blogger.com/profile/15135338616598357444noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-76079643987528909182015-06-10T16:32:33.651+00:002015-06-10T16:32:33.651+00:00In other words, German industry should become less...In other words, German industry should become less competitive, thus imperiling jobs. Small wonder that that is a hard sell in Germany, no? Especially as the main beneficiaries in terms of a reallocation of industrial activity might well not be other Eurozone countries, but Central/Eastern Europe, China, or South Korea -- all of which have increasingly capable manufacturing industries.NMnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-73791755396526336442015-06-10T16:27:18.245+00:002015-06-10T16:27:18.245+00:00The unstated assumption here is that the Germans c...The unstated assumption here is that the Germans care one whit about the Greeks. I don't see why we should assume that. A basket-case, deflationary Greek economy only helps the German currency position vis-a-vis the Euro. Unemployment is at its lowest level in years in Germany, the Eurocrisis has been thunderingly good business for the Germans.Anonymoushttps://www.blogger.com/profile/02948571774423709195noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-12915016862449087662015-06-10T16:21:12.064+00:002015-06-10T16:21:12.064+00:00Simon asks what is wrong with German economics. I...Simon asks what is wrong with German economics. I don't think there is anything wrong with German economics. The Germans know perfectly well what needs to be done. They have done something very similar in the recent past. They just don't want to do it. Anonymoushttps://www.blogger.com/profile/03031566374322809471noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-1837773905019734482015-06-10T15:47:50.076+00:002015-06-10T15:47:50.076+00:00No, because Germany needed to create inflation abo...No, because Germany needed to create inflation above 2% to make up for their below average inflation before 2007. In other words we needed a period of overheating in Germany. Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-82824586560931440152015-06-10T14:51:20.150+00:002015-06-10T14:51:20.150+00:00I am talking about the one euro workfare and minij...I am talking about the one euro workfare and minijobs.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-14249397170300125732015-06-10T14:38:49.475+00:002015-06-10T14:38:49.475+00:00Why should anyone take Wolfgang Munchau seriously?...Why should anyone take Wolfgang Munchau seriously?Anonymousnoreply@blogger.com