Old Europe meets

[GePap]

The Germans should also change thier immigration policies and let more foreigners in, to get them moving. too much self-pity in germany. They have a past of going oevrboard, but still, get off your asses.

[Boris Godunov]

Much of Germany's problems stem from the upgrading of the East. Here's their economic outlook from the CIA world fact book:

"Germany's affluent and technologically powerful economy turned in a relatively weak performance throughout much of the 1990s. The modernization and integration of the eastern German economy continues to be a costly long-term problem, with annual transfers from west to east amounting to roughly $70 billion. Germany's ageing population, combined with high unemployment, has pushed social security outlays to a level exceeding contributions from workers. Structural rigidities in the labor market - including strict regulations on laying off workers and the setting of wages on a national basis - have made unemployment a chronic problem. Business and income tax cuts introduced in 2001 did not spare Germany from the impact of the downturn in international trade, and domestic demand faltered as unemployment began to rise. Growth in 2002 again fell short of 1%. Corporate restructuring and growing capital markets are setting the foundations that could allow Germany to meet the long-term challenges of European economic integration and globalization, particularly if labor market rigidities are addressed. In the short run, however, the fall in government revenues and the rise in expenditures has brought the deficit close to the EU's 3% debt limit."

As for Spain:

"Spain's mixed capitalist economy supports a GDP that on a per capita basis is 80% that of the four leading West European economies. Its center-right government successfully worked to gain admission to the first group of countries launching the European single currency on 1 January 1999. The AZNAR administration has continued to advocate liberalization, privatization, and deregulation of the economy and has introduced some tax reforms to that end. Unemployment has been steadily falling under the AZNAR administration but remains high at 11.3%. The government intends to make further progress in changing labor laws and reforming pension schemes, which are key to the sustainability of both Spain's internal economic advances and its competitiveness in a single currency area. A general strike in mid-2002 reduced cooperation between labor and government. Adjusting to the monetary and other economic policies of an integrated Europe - and further reducing unemployment - will pose challenges to Spain over the next few years."

Doesn't look quite as rosy as Fez portrays, though certainly not dismal. But Spain's numbers in terms of GDP are waaaaay below Germany, and they don't have near the industrial base or labor pool that Germany has. Germany also has a significantly larger abundance of resources.

[Giancarlo]

I didn't paint it rosy, Boris. We got problems that we are going to overcome. I never brought up comparsions of the GDP, our population is smaller too... but Germany is in more trouble than we are.

Oh and you actually proved a point I was trying to make, from you quoting:

Germany:

Structural rigidities in the labor market - including strict regulations on laying off workers and the setting of wages on a national basis - have made unemployment a chronic problem.

Exactly what I was saying.

[Spiffor]

There are 2 dynamics at hand in the EU :

Former bad economies have a quite high growth rate (Spain, Portugal, Ireland) whereas former "good" economies suffer from low growth rates, especially Germany. It has to do with European harmonization of the economy within the one market.

However, there is a real beef that partly explain's EU discrepancies too : the monetary policy is common, and decided in Frankfurt's ECB, while the budget policy is still decided by individual states. It leads the EU in an absolute economic aberration, because States can only use the budget tool without deciding on the monetary tool.

The UK's monetary policy is independent, which gives the UK much more leeway when adjusting inflation or changing the pound's value. It leads to cohesive economic policies. IMHO, that's a main reason why the UK has a much faster growth than the other economies.

The only solution to that for the EU is either to scratch the Euro and come back to the previous fruitless and unfair competition, or to have a common budget at last.

[TCO]

Originally posted by Big Crunch


They are rather pre-occupied with Poland at the moment.

What? No opportunities at home?

[Boris Godunov]

Originally posted by Fez
I didn't paint it rosy, Boris. We got problems that we are going to overcome. I never brought up comparsions of the GDP, our population is smaller too... but Germany is in more trouble than we are.

Oh and you actually proved a point I was trying to make, from you quoting:

Germany:



Exactly what I was saying.

That Germany is "in more trouble" is a dubious claim, as Germany clearly has much more of the means of economic growth, considering its huge industrial base, large population and the current global status of its major corporations. As the CIA points out, German companies are indeed laying a sound foundation for future prosperity. You seem to want to believe the most pessimistic outcome for Germany and the most optimistic for Spain--this simply doesn't wash in reality.

The labor problem is there, but surmountable. It isn't the absolute roadblock you painted it to be.

[Giancarlo]

You may claim that. But it is in more trouble. I was pointing out with the labor requirements. If they change that, I will quickly change my views to optimistic about Germany. For now with a leftist government I will retain my negative outlook. That is my opinion and you cannot change that. I understand that your points are all good and valid, but so are mine.

[Az]

Fez, there is something to understand here: More working hours don't equal more productivity. I too feel that this MAY be a weakening factor in their economy, but I am not completely sure.

[Boris Godunov]

In other words, stick your fingers in your ears and sing "Mary Had a Little Lamb."

Yup, good ol' Fez is back!

[Giancarlo]

Originally posted by Azazel
Fez, there is something to understand here: More working hours don't equal more productivity. I too feel that this MAY be a weakening factor in their economy, but I am not completely sure.

Yes but labor restrictions and labor union control does not help or benefit the economy. But you are a communist so your economic views would be different then mine. The labor restrictions are exactly what is causing Germany's economy to falter.

[BeBMan]

Ironically our "leftist government" is under fire these days because of planning changes in the labor market that would help to solve our problems. There are also signals from the conservative opposition to support many of those changes.

[Spiffor]

Azazel :
About this issue, I remember how many people in France gloated that the 35 workhours week had us tank : it had become offcial that our GNP per capita was among the lowest of the EU, only higher than Spain and Greece IIRC.

It turned out the average productivity per worked hour was way superior to more liberal countries like the UK. It also turned out that the productivity per working person was higher than the UK. The real reason of the lower GNP per capita was explained by the amount of people that didn't work (students, retirees, homewives...).

Our 35 hours workers were actually more productive than the 48 hours Brits

[Giancarlo]

Originally posted by BeBro
Ironically our "leftist government" is under fire these days because of planning changes in the labor market that would help to solve our problems. There are also signals from the conservative opposition to support many of those changes.

Well perhaps this is a start of a change in the general incompetence of Schroeder.

[Spiffor]

BeBro : will Schröder apply the conclusions of the thinktank that designed "solutions" in spring 2002 ? I keep forgetting their names.

[TCO]

Originally posted by Spiffor
There are 2 dynamics at hand in the EU :

Former bad economies have a quite high growth rate (Spain, Portugal, Ireland) whereas former "good" economies suffer from low growth rates, especially Germany. It has to do with European harmonization of the economy within the one market.

However, there is a real beef that partly explain's EU discrepancies too : the monetary policy is common, and decided in Frankfurt's ECB, while the budget policy is still decided by individual states. It leads the EU in an absolute economic aberration, because States can only use the budget tool without deciding on the monetary tool.

The UK's monetary policy is independent, which gives the UK much more leeway when adjusting inflation or changing the pound's value. It leads to cohesive economic policies. IMHO, that's a main reason why the UK has a much faster growth than the other economies.

The only solution to that for the EU is either to scratch the Euro and come back to the previous fruitless and unfair competition, or to have a common budget at last.

That is part of the dynamic. But also spain, port, ireland, are all moving towards more capitalist systems. UK moved there a while ago and is still there. Germany/France remained trapped in 70's social democracy.