The European Commission is unhappy with Germany’s high level of productivity, because it drives up German exports relative to the rest of the EU. The solution? Germany must cut production and limit exports!
JLH has translated a brief article about what’s happening, and includes this note:
This piece from PI caught my eye because the US comes into it as one of the anti-market forces, and because it reminds me of nonsense like cap-and-trade, and not least, because I bet Angela Merkel of the former GDR feels right at home with this kind of tinkering.
The translated article from Politically Incorrect:
The EU Want to Forbid German Firms to Sell
What is being undertaken against German companies nowadays is downright abnormal and perverse! The EU Commission is complaining about Germany’s export surplus. What is that supposed to mean? For example, that German car companies should not sell their vehicles in other EU and European countries, stop production, scrap the new cars, double their prices? Anything goes with the EU bigwigs, just so we don’t sell anything any more and the foreigners, like the French, get to sell more. Planned economy at our expense. What nerve! So what are the premises the EU was founded on?
Wasn’t unrestricted trade one of its basic liberties? And now the big shots in Brussels are deciding who can sell how much in the EUSSR — like Stalin in the USSR or the communists in the GDR, systems that went under for precisely that reason!
And it gets worse! In our land of economic illiteracy as run by socialists and communists, there is no breath of resistance, no full-throated protest against Brussels’ presumptions.
And it gets even worse! The formerly capitalist USA and the International Monetary Fund agree! Just as the leftist Zeit has thought, the market should be turned off. How did Germany get back on its feet economically after the war? With what economic prescription of Marx, Brezhnev, Ulbricht, Pol Pot or Kim il-Sung? Only after China economically sloughed off Mao did the upswing come. And all of that no longer means anything? Crazy!
What exactly is this story? Interesting if true, but is there a quote, a document out there that is verifiable?
The German weekly Die Zeit is the original source for this story.
And if you want the primary source, check this EU document.
It is 130 pages in German. I’m sure an English version would exist.
Henrik Ræder Clausen
I believe you’re a politician, no? Shouldn’t You already know that Germany is subsidizing ALOT of its industry, making for an unfair competitor on the market? If anything, as a Danish politician, You should be quite pleased that Germany is being told to hold its horses.
regards
I quit formal politics, for I found that the dishonesty required was too much for me to stomach.
Any state may bankrupt itself by subsidizing, that’s a very effective method to go entirely broke.
But here in Denmark, there is no cause for concern. A richer Germany purchases more Danish good, and our export to Germany is booming.
Henrik
I’m sorry to hear You quit formal politics. These days we need more honest politicians.
I would disagree that Germany isn’t a cause for concern considering how jobs are moving from Denmark to Germany. Probably a discussion for another time though.
regards
Angela ‘The Mercantilist’ Merkel.
I should look into those subsidies.
Such comments were ushered not only from the EC but also from the IMF and the Worldbank. Everbody knows that this is utter nonsense. It only shows how stupid those organisations are, no European leader of any standing will follow their advice.
Thank you Henrik.
I looked at the document (in english) referenced in the newspaper article
http://ec.europa.eu/economy_finance/publications/occasional_paper/2014/pdf/ocp174_en.pdf
and although I didn’t read the whole thing, I found nothing about reducing Germany’s production or export, but rather many suggestions to increase demand and investment inside Germany.
Although I am no fan of the EU, this article seems to be nonsense and should be deleted.
The original Zeit article to which this PI comment refers offers a few quotes–one indignant and one patronizing–to the effect that Germany is doing its job, and Brussels and others whining that German surplus exports create deficits for their partners is nonsense. Another suggests they should just roll up their sleeves and work, like the Germans. There is also the matter of the US and IMF taking the Brussels position.
This is a lot more than just suggestions about internal consumption, and the PI author is venting in agreement with some of those quotes and adding his own points. Maybe they did not render that in English, or maybe you should have read the whole thing.
M.Riggs: yes , I fully agree to increase domestic demand in Germany. As a civil servant, my purchase power has decreased by about 15% in the past decade. I feel this particularly painful when travelling abroad and checking restaurant menus before entering, a habit that takes me back to my backpacker days in the 60 ies. To make it clear: I do not cry for pity or compassion personally, I still do travel, being in the paygrade of an Army Major , but the shiny new BMWs next to me at the trafic lights are often manned by…. guess who!
Herb, I sympathise. High production and low consumer demand is an inherently dangerous situation. In short shrift, it is what caused the 1929 crisis.
I think one of Germany’s problems is customer hostility. The customer is treated so badly by those who offer goods and services that people hesitate to go out and spend money. But also I think purchasing power is way too low for such a productive economy.
Who is in the BMW? I am clueless.
High production and low consumer demand is an inherently dangerous situation. In short shrift, it is what caused the 1929 crisis.
Well, no:
What caused the crisis was the Fed-created boom in liquidity.
What caused the Depression was the ensuing state intervention.
Henrik, what I describe is at the heart of what mainstream Keynesian economics identifies. I cannot find your viewpoint among mainstream economic theory on the Depression.
But the bottom line is that lack of demand and investment in the face of high production can easily lead to deflation and stagnation.
jlh: maybe you could roll up your sleeves and find even a single relevant quote in the document?
M.Riggs: here’ s a clue: often people with a predelection for grease in their hair and a expression that makes you wonder how such a face can afford a 50.000 € car.You get the picture?