>There's nothing I enjoy more than the plight of the German Saver, who's obsession with "fiscal responsibility" has led to shitty austerity politics all across the EU (to be fair some other northern European countries like Netherlands also share the same view) and depressed growth for the poorer southern European countries.
Germany has benefited most of all from the unfinished project of the EU. Without becoming a federal union like the US, but having a common currency, Germany's exports have been artificially cheaper and thus more competitive for over 20 years.
>This is the natural outcome from the obsession with running fiscal surpluses. Now Germany is on the brink of recession and they're finally starting to make some noises about fiscal spending, but the politics will likely limit it to modest deficits than anything transformational. Enjoy the negative rates.
The common currency (Eurozone) is deeply flawed and it only allows a rich country like Germany to win at the expense of poorer countries like Greece or Portugal. I find it insane that EU politics have never really dealt with this. I find it absolutely insane that after the 2011 sovereign debt crisis, Germany somehow managed to escape with keeping the Eurozone intact and having the poor countries impose austerity instead.
There absolutely needs to be a political revolution in the Eurozone countries. Either complete the EU project by becoming a United States of Europe, and receive all the equalizing payments of healthcare, social security, and common military spending at the federal level, or get rid of the common currency. It's just hurting the poorest people in the Eurozone to keep the current arrangement.
You might be under the impression "well Germany might be parasitic vis a vis other Eurozone countries, but at least it's good for working Germans", but you'd be wrong.
The US today has a tight labor market which will eventually drive wages up if it persists long enough. Germany on the other hand has similar employment statistics but they did it with the Hartz reforms [2]. The unemployment stats look great because you can get a shitty low wage job [3].
Germany has kept the wages of workers depressed in order to be an export powerhouse. It's parasitic on other Eurozone neighbors but also on German workers. The people who have benefited the most from this arrangement are the German capital class. The shareholders and managerial class of German industry, whether it's giants like Volkswagen or even the small Mittelstand companies. German workers should have gotten wealthier over time which would have made Germany similar to the US in being driven by domestic consumption. That in turn would have made other EU members better off because those wealthier Germans would have been able to consume more of their goods and services. It's truly baffling how even German workers have put up with this. They're losing to the benefit of German capital.
You can't complete the "EU project". Politically and economically, it is just very obvious that states want different things from Brussels (btw, the people who go to Brussels are generally very different from national politicians...they are globalists, most citizens in Europe are not)...that is why it hasn't happened already.
You also raise very good points, that most people forget, about how Germany got here: they got here by squeezing the poor and transferring wealth to billionaires (there is a reason German billionaires are low-key). Another important feature is banking: that is how the wealth transfer occurred, and German banks are in a terrible state (they seem to get involved in literally every financial crisis: CDOs, lending to shipping companies, lending to Turkey, lending to Greece...it is unbelivable). That is why the German model doesn't work (Japan copied the German model, and their banks self-destructed eventually...it doesn't work).
One cool stat that demonstrates this is that Germans have slightly lower net financial assets than Greeks. Yes. The richest country in Europe has citizens that are poorer than the "basket case".
What is also forgotten is that two decades ago, it was Germany that was the basket case (the OP also inaccurately says that Germany was a powerhouse in the early 1990s...nope, it was a basket case then too because it had to integrate East Germany). The Euro has benefited one nation above all others (and Netherlands...although their success is partly due to becoming a tax haven) and imposed massive costs on others (Italy, in particular, has had nearly three decades of austerity between the ERM and the Euro...it is madness).
That's a pretty good overview of a good amount of things, Germany exports a lot of things, including their own problems imo. Germany has not held their own when it comes to demand growth. People seem to love Germany's fiscal discipline, but they don't realize that they pursue it to detrimental extent, if not for their own sake, than that of their neighbors. The schwarze null is kind of a cynical joke at this point.
The problem with being like, a systemic export nation, is that your shifting burden to someone else. It sounds okay on paper, but what you see is that can hide a lot of your own issues. If you aren't getting better, your sustained welfare is vampiric, it's coming from your counterparts.
And like you are saying, a personal pet peeve of mine is the outsized amount of private companies. Look at any global etfs, Germany is behind the UK, France, Switzerland (lot of multinationals tbf) and Canada (though not European). That's mainly the work large amounts of private companies. I'm sympathetic to the fact that its their companies, they don't have to sell them. But when it creates a fairly significant skew in sort of a capital picture, you can end up with stuff like this, where your capital class is even more walled off than elsewhere, since you can't build equity in a large portion of their economy even if you wanted to.
Thank you for taking the time and contributing a well-explained and argued line of argumentation.
Yes, Germany is wealth because others (the southern countries) have to compete because of the union currency. I always thought people of the southern countries (i know people from spain and greece) would rage more vigrously against that. Interestingly rage is only mildly and not a big thing. Maybe it's the selction bias bubble I am living in, I don't know.
Keeping the wages of workers down is good for workers' incomes if the alternative is high structural unemployment as seen in other Eurozone countries that are not so well managed. The fact that the supply of ready and willing labor has yet to be exhausted (which would ultimately boost wages and plausibly final consumption) is neither here nor there.
>The US today has a tight labor market which will eventually drive wages up if it persists long enough. Germany on the other hand has similar employment statistics but they did it with the Hartz reforms [2]. The unemployment stats look great because you can get a shitty low wage job [3].
Meh, that flies in the face of facts. Real wages in Germany had been depressed for long, not least due to unification, but are picking up: https://d3fy651gv2fhd3.cloudfront.net/charts/germany-wage-gr... and there's not reason to believe that is going to stop anytime soon.
>The people who have benefited the most from this arrangement are the German capital class.
It's not necessarily Germans who own the companies. This article from 2014 shows: [1]
>>Who owns the DAX, Germany’s pre-eminent equity index?
>>Not many Germans, it turns out. According to fresh research from the Bundesbank, the share of domestic ownership of the index—which comprises the 30 largest public companies in traded in the equities markets—fell from 44.1% in 2005 to 36.3% in 2014. Meanwhile, the foreign ownership share rose from 55.9% to 63.7%.
That only explains a small portion of the problems. The reality is that there are governments in the EU that are even more incompetent than Germany's and it hurts them more than some little currency problem. Austerity isn't solution but telling them to stop spending their money carelessly is a step in the right direction.
The U.S. labor market isn’t that tight for non-supervisory roles and wages aren’t going to grow beyond inflation under current policies. We’ve been in a ten year expansion with no wage growth to speak for.
>There's nothing I enjoy more than the plight of the German Saver, who's obsession with "fiscal responsibility" has led to shitty austerity politics all across the EU (to be fair some other northern European countries like Netherlands also share the same view) and depressed growth for the poorer southern European countries. Germany has benefited most of all from the unfinished project of the EU. Without becoming a federal union like the US, but having a common currency, Germany's exports have been artificially cheaper and thus more competitive for over 20 years.
>This is the natural outcome from the obsession with running fiscal surpluses. Now Germany is on the brink of recession and they're finally starting to make some noises about fiscal spending, but the politics will likely limit it to modest deficits than anything transformational. Enjoy the negative rates.
The common currency (Eurozone) is deeply flawed and it only allows a rich country like Germany to win at the expense of poorer countries like Greece or Portugal. I find it insane that EU politics have never really dealt with this. I find it absolutely insane that after the 2011 sovereign debt crisis, Germany somehow managed to escape with keeping the Eurozone intact and having the poor countries impose austerity instead.
There absolutely needs to be a political revolution in the Eurozone countries. Either complete the EU project by becoming a United States of Europe, and receive all the equalizing payments of healthcare, social security, and common military spending at the federal level, or get rid of the common currency. It's just hurting the poorest people in the Eurozone to keep the current arrangement.
You might be under the impression "well Germany might be parasitic vis a vis other Eurozone countries, but at least it's good for working Germans", but you'd be wrong.
The US today has a tight labor market which will eventually drive wages up if it persists long enough. Germany on the other hand has similar employment statistics but they did it with the Hartz reforms [2]. The unemployment stats look great because you can get a shitty low wage job [3].
Germany has kept the wages of workers depressed in order to be an export powerhouse. It's parasitic on other Eurozone neighbors but also on German workers. The people who have benefited the most from this arrangement are the German capital class. The shareholders and managerial class of German industry, whether it's giants like Volkswagen or even the small Mittelstand companies. German workers should have gotten wealthier over time which would have made Germany similar to the US in being driven by domestic consumption. That in turn would have made other EU members better off because those wealthier Germans would have been able to consume more of their goods and services. It's truly baffling how even German workers have put up with this. They're losing to the benefit of German capital.
[1] https://news.ycombinator.com/item?id=20793982
[2] https://theconversation.com/questioning-the-claim-of-germany...
[3] https://en.wikipedia.org/wiki/Marginal_employment#Germany