The US Federal Reserve has committed itself to print as much money as it believes it needs to to keep the dragons at bay. Meanwhile, the Germans, who have been thrifty, see no reason why they should spend money they don't have -- and spendthrift nations hate them for it. Excerpt:
Mr. Lauk says Mrs. Merkel will not be a new Herbert Hoover, who seemed to do his best to drain the United States economy of its remaining lifeblood even as it tumbled into the Great Depression.But her reluctance to follow other Western countries' lead has puzzled many allies and struck some of Germany's critics as oddly ascetic.
Peer Steinbrück, the German finance minister, has indicated concern over budget deficits and has characterized the British effort to kick-start its moribund economy as "crass Keynesianism." In his view, European pressure for greater spending masked a desire to exploit the German taxpayer for the benefit of the country's neighbors.
To the question of why Germany did not simply spend its way out of recessions, as Keynes, the great British economist, suggested, Mr. Steinbrück shot back, "Just because the lemmings chose the same way does not make it the right one."
Berlin appears to have other grudges against its European neighbors, often tinged with a measure of contempt for what it sees as their failings.
In its view, other countries scream for more German spending -- some of which would go to Italian shoes, for example, or French wine -- because they refused to make the hard choices in recent years that reinvigorated the German economy.
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Pyrrho wrote, "Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy." I suspect Phrrho and his ilk really think that any policy that makes sense to Joe the Plumber is by definition a bad policy.
Phyrro Writes: "So anybody who admires what the Germans, Japanese and Chinese have done has to realize that they have been able to pursue their current mercantilistic practices precisely because of this geopolitical bargain, and that these policies could not have been adopted by the US without causing a huge geopolitical crisis."
That may be true, in part, but it's also important to note here that we didn't do this for free. It's been a symbiotic and beneficial relationship. The price we exacted for this level of favoritism has been pretty hefty, and I would say that more than tips the balance in our favor. We lean on these economies alot and also give them a reason to do business. We are the ones who aren't playing on a level playing field.
It's hard to put Germany into the same category as Japan and China though, because our primary maneuvers occured so long ago, and it has been a relatively self-sustaining economy since then (compared to the Japanese economy).
If I were to say which of the EU bloc is the best prepared to stand on its own two feet (if the American buying-machine ceased to exist), it would definitely be Germany. GB exists solely to spread it's service around the world, whereas Germany (and to some extent, eastern europe) maintains a pretty robust manufacturing base in the country and could easily operate at significant growth levels without the influence of external forces, if that is your goal.
The same can't really be said about France, Spain, or even the USA to a certain degree (though this is arguable, because we would simply have to consolidate our priorities.) The others simply lack the resources necessary to carry on robust economic growth without external factors.
Ex-Pat Mom writes: "The degree of casual, everyday thrift and personal responsibility is stunning."
Glad to see you are enjoying yourself. I've spent many months there off-and-on. Germany is a fantastic country and they really learned a lot after WWII about personal responsibility and accountability both in society and government. There is a lot we could learn from their meticulous and methodical nature. Least of which is a Garbage can on EVERY street corner.
The basic problem I have with the whole comparison, here in the US, is that Germany proves that social initiatives do not have to be prohibitively expensive to be effective - as they often are here in the US. Everything is on such a large scale, we find it easier to throw money at our problems than to sit down and hammer out a best-case solution and implement it. We always make our decisions on a dichotomy of two option; Option A at the expense of B. Health care at the cost of Education, or whatever comparison is politically popular that day. We never consider that we could do both if we work at it. Too often we sacrifice our expectation to the expense of maintaining an archaic establishment (too many examples to list).It comes down to work versus utility. We simply do not see the benefit (or it is not "politically viable") in working harder when we can simply buy (PRINT!) our way out of a problem. Thanks John Maynard... for that one.
Worry about Weimar -- it's a lot closer to home...
Clare, that statement is beyond pathetic. I'm not going to bother calling you clueless because, as a critic of empiricism, you do not even believe in the necessity of clues.
Matt,
You make several good points, but I believe my criticism still stands. The three countries I cited are overly dependent on exports. Nations with persistently large surpluses should see their currencies rise in value. In the case of Germany, locking its quarry into a currency union with them is going to blow up on them. Mark my words (yuk, yuk).
We simply do not see the benefit (or it is not "politically viable") in working harder when we can simply buy (PRINT!) our way out of a problem. Thanks John Maynard... for that one.
Aw, come on! If you're going to criticize Keynes, please take the time to understand him first.
I suspect [Pyrrho] and his ilk really think that any policy that makes sense to Joe the Plumber is by definition a bad policy.
I suspect it hasn't occurred to Carey 'and his ilk' that the very idea of Joe having an opinion on macroeconomic policy is patently ridiculous. I wouldn't expect Joe to listen to my opinion about plumbing because I don't know the first thing about it. Ditto economics, which is several orders of magnitude more difficult to comprehend.
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