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Germany as Maya the Bee

George Pieler and Jens Laurson take issue with the French finance minister's claim that Germany's productivity is what ails Europe's economy. Writing in the Wall Street Journal they compare Germany with Maya the Bee. (Subscribers only, but you get the full article via Google News.)

Maya was a curious, busy bee, always buzzing from adventure to adventure. Her best friend, Willi, however, was less ambitious and had a more rotund physique. His catch phrase was the elongated, nasal cry: "Maya-don't fly quite so faaaaast."

We were reminded of the Willi character when French Finance Minister Christine Lagarde recently called on Germany to compete a bit less effectively. She argued that Germany's success in exporting goods and its high productivity supposedly puts undue pressure on the other European economies. Ms. Lagarde went so far as to suggest that higher German productivity, in part caused by restrained labor costs, might not be a "sustainable" model for the future.

Laurson and Pieler criticize the "concept of economics as a zero-sum game, i.e. France may only gain at Germany's expense" which "is so woefully outdated that one must wonder how Europe ever got as far is it did, economically. It utterly disregards the fact that competition doesn't weaken but strengthens economies."

It's good to see some support for Germany's economic policies at a time when Germany is criticized as the new bad boy and especially in the Wall Street Journal, which is rarely supportive. And it is quite sweet that Germany, formerly known as the "sick man of Europe" is now seen as the curious busy bee Maya, who's colors even represent the new coalition government of CDU (black) and FDB (yellow). Though, then again, the fable of Maya the Bee originally published in 1912 "lauds German nationalism. Maya represents the ideal citizen, and the beehive represents a well-organized militarist society," according to Wikipedia's know-it-alls. So maybe the comparison is not so charming after all.

Moreover, Laurson and Pieler agree with Finance Minister Lagarde regarding "one economic truth"  and that is: "Germany should cut taxes. But it should do so for its own good, to promote more economic growth." Oh no, not again. Cutting taxes is the standard advice Germany got from America for decades, even though we have lowered plenty of taxes, especially of top earners, over the last twenty years. Such advice is neither helpful nor original and creative. As long as tax cuts lead to higher debts, it's not feasible. Higher taxes are needed to pay off the debt. Both Germany's finance minister and the federal president, who used to run the IMF, ruled out further substantial tax cuts. Furthermore, there is not much more to cut in government budgets.

Both the US and the Germany have a high level of debt that is not sustainable. More and more experts believe the US (and eventually the Eurozone) will tolerate high inflation and devaluation in order to deal with the debt crisis in the long run. Everybody who cares about the savings of the middle class should be concerned about that.

ENDNOTE: This is the 1111th post since this blog started more than five years ago. :-)

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Joerg Wolf on :

Another reason why we can't cut taxes: "One of the more reliable cultural generalizations is that (northern) Europeans keep their public infrastructure in good repair, while Americans starve the public sector of resources, since they don't regard boring public infrastructure as matters of national prestige. Hence the infrastructure crisis." [url]http://andrewhammel.typepad.com/german_joys/2010/04/at-least-i-know-im-free.html[/url]

Joe Noory on :

I have been listening to this "our infrastructure is falling apart" mantra for 20 years. During those 20 years, we have done nothing but replace bridges, roads, railroad bed, and building like madmen. The infrastructure you see that still provokes ideas that "the US is falling apart", all happen to be in increadibly corrupt cities, and are city or state property. If it's federal or in the parts of the country NOT governed by urban city hall mafia, chances are that it's been restored or built in the past 20 years. As for comparisons, in Europe one sees [i]-high profile, high visibilty-[/i] projects which CONTINUE to appear to be under sonstruction, but that's illusory when you see that older work has changed little, and has undergone no great change to the way they're maintained. Berliners especially can look to the post-wende repair and reconstruction, but that is an exception, not a rule. The difference being that the kind of work you saw in the explosion of activity from 1999-2007 was that it was more likely to be private moneys in the US, and government work in Europe. Raising taxes in the US will NOT visibly change the roads, bridges, etal., because they are largely paid for through 1) fuel taxes, and 2) municipal bonds. If taxes are sold as a "cure" for an infrastructure problem, you are simply being lied to.

Marie Claude on :

it looks more like russian oligarcy !

Pat Patterson on :

That might mean something except that passenger rail has never been profitable in the US but freight has. And due to the differences in distance involved ignoring passenger rail makes much more sense than not. But it should be noted that the US, even taking into account the differences in population, has almost 3 times the miles of rails as Germany. But the telling point is that the US has 17 times the number of airports and over ten times the number of miles available via roads. I'm not sure what crisis is being referred to since it is still faster to drive from where I live to pretty much any where in the state while train lovers are still looking for parking spots at the train depot. Most Americans look at rail transportation of passengers much like they would look at subsidized stage coachs. Pretty and romantic but hardly up to the tasks they performed a hundred years ago.

Marie Claude on :

Christine Lagarde was saying what the rest of EU thinks (as usual France is still the alone voice that dares to point on the disturbings things, ie 2003 for Irak war). Germany benefitted of the EU, and especially of the inflated eurozone for selling its goods, which made the Meditrranean Club useful to absorb german exportations at thee glorious times. Now that the toy is going to be broken, I suppose that these EU failing countries will have no more means to buy german. In the meanwhile Germany didn't buy goods from the Mediterranean club, but preferred to import from lower labor forces countries, I was amazed to see in Spain and Portugal, Germans (still with their habits to consumerise at lower prices, buying tomatoes from Marroco, or from whatever EU outsiders countries),going to stores like Lidl, Aldi, Netto... whereas supermarkets like Auchan, Carrefour, IntermarchÚs were invested by Nationals. It's not because they didn't want to buy spanish or portugese, but because of their own revenues that have been blocated for a decade, which allowed a lower cost of labour force about 15% lesser than in the eurozone, thus making Germany more competitive for exportations. In the long term, this policy will return against Germany itself, as their main customers are going bankrupted. Now, I applaud Germany that had the courage to undertake non popular reforms, such as for retirment, cutting charges in social security... up to now our unions can't see the urgence of them. The solution would be devaluation of the euro, or adapting a euro for each country means, can't see a Frau Veto agreeing with that, where a Helmuth Kohl had a global vision of EU, Merkel has only the german vision of EU, or some say, the Prussian's, and if Germany carries on the same path after the next 9 of may elections, then we'll assist at the re-birth of the Bismarck republic, we all know how it ended. http://tinyurl.com/yefx2qt I suppose that none remember the Latin Union of the 1th century, which had the same purpose of a common money too, but based on silver and gold values. It ended with the break of , first 1870 war, then 1914 ended the experience for goods. So I expect that the euro will have the same fate, and because of the same reasons. I'm not optimistic, but history learnt us some harsh lessons. http://en.wikipedia.org/wiki/Latin_Monetary_Union

Pat Patterson on :

The larges purchaser of goods from Germany is France(10.2%), then almost a tie between the Netherlands, the US and the UK. While its greatest amount of imports are coming from the Netherlands(8.5%). Hardly any of those countries low cost sources or purchasers.

Marie Claude on :

http://lekiosque.finances.gouv.fr/Appchiffre/Etudes/Thematiques/A2009.pdf http://lekiosque.finances.gouv.fr/Appchiffre/Etudes/tableaux/apercu.pdf http://www.investingreece.gov.gr/default.asp?pid=56&la=4 http://www.german-business-portal.info/GBP/Navigation/en/Business-Location/foreign-trade-statistics.html http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-RA-08-008/EN/KS-RA-08-008-EN.PDF "The larges purchaser of goods from Germany is France(10.2%)" also the most populous country in EU after Germany (64 millions inhabitants)

Joe Noory on :

The arab world is already saturated with Euro-imports, especially from Greece, France, and Germany. Ironically, you see things imported that are made domestically too, such as foodstuffs and the like. The probelm is one of assymetrical trade barriers where a Lebanese farmer or prepared foods company finds himself unable to compete with Nestle, even though their goods fill the shelves in Lebanon, and unable even to sell their goods in fortress Europe. Before you get carried away with some hair-brained anger, loony theories cut-and-pasted from blogs, we're talking about countries that have to oil, or no significant oil exports, such as Lebanon, Jordan, Syria, and Egypt.

Marie Claude on :

funny that you can only quote Lebanon as an arab country ! do you know that they are bilingual, (or trilingual nowadays, english is als spoken) they speak also french like you, and most of them have parents in France or in America. Nestly isn't anymore a typical french product, as the company is "global", they even have a base in America ! I still remember a lybian blogger who said that she loves the "vache qui rit"... Besides, North Africa also speak french, apart Egypt, Jordan, Lybia ! and sorry, that we are a agricultural country, that has green fields when others have sands and rocks ! or soils that are suitable for growing corn or grapevine. But Marroco does grow tomatoes, early potatoes, strawberries... Now I'm not inventing the labels Lidl, Netto, Aldi, that are of german origin, and if they can afford low prices, it's because they import from low labour prices countries, Marroco was quoted only European countries make the rest. Lebanese farmers don't have cows but sheep and goats, except a few cow in the heights of the mountain !

Marie Claude on :

" Marroco was quoted only European countries make the rest." ment: Marroco was quoted, but eastern European countries make the rest.

Joe Noory on :

Do I know they're bilingual? Do I realize that they don't raise cows? Stop pretending that you understand things simply by way of their image, and some opinion you've read. In ALL CERTAINTY, I can say that I know much more about the place than you do. I'm Lebanese. I have family there, and I've lived there. I own some land in those mountains, and that isn't where your mythically important cows are. Besides, the example of agracultural produce is a far stronger example. As for Nestle, I didn't mention France, did I? I mentioned that it is [b]an example[/b] of a foreign brand that crowds out through predatory government practices, the local producers who are essencially barred from exporting easily into Europe. I also didn't say that it was the only brand. Oh, and Nestle originated in Switzerland, you dope. So spare me your empty, evasiveness and fake "rayonnement" about things you don't even understand.

Marie Claude on :

yeah, and you're convincing ! I know and read quite a few lebanese bloggers since quite a while ! Nestly, might have been of Swiss origin, but it's decades it was managed by French direction ! but since your purpose is to denigrate anything french, and accusing me of whatever sillyness of your invention, I take your comment as so rational !

Pat Patterson on :

I'm not to sure why these links were provided since they essentially show that the bulk of German imports are coming not from low wage producers but countries that are traditionally considered as providing high value goods. China is indeed in the top five but imports mostly consumer goods while Russia imports into Germany are overwhelmingly petroleum products. The claim that Germany, "... preferred to import from lower labor forces countries." Germany is paying top dollar for high quality imports from countries that are not by any stretch of the imagination lowcost. This claim is simply not born out by the statistics unless France and the Netherlands are now considered to have developing economies.

Marie Claude on :

yeah before the adjunction of the eastern EU countries, France used to be the main agricultural supplier ,all right ! though importation in EU, doesn't say if they are from Romania, Bulgaria,Hungary Poland... ah breaking news, Renault is goingg to be associated with daimler, for the electric cars !

Joe Noory on :

So what. We aren't talking about France.

Marie Claude on :

tiens donc, then of what are you talking about ?

Pat Patterson on :

Who made this 'racist' comment about the Greeks. The Deputy PM Theodoros Pangelos or the Finance Minister Wolfgang Schaeuble? "The Greeks have problems. Why do they have problems? Because they don't work enough. And why is that? Because they have a good climate, music and drink and they are not as serious as the Germans".

Marie Claude on :

Bild relied 65 % of the voices like Schaeuble The Greeks don't work less than the Germans, but differently ! and of course their tradition is to discuss prices, when one trader can lowers his prices, it means that the taxes are off ! as so "black" work, generally one person has an "official" work in a family to benefit of the social insurances for the whole family

Pat Patterson on :

You should have checked first as the quote is from the Greek Deputy PM Pangelos.

Marie Claude on :

aber nein, es war Schlarmann and you're a specialist of distortions

Joe Noory on :

Do you really think the rest of the world cares about the minor technicalities of who sells who what inside the EU? Seriously - do you really think it's should matter on a blog meant to discuss transatlantic relations? The blog is about the German economy, not whatever little desperate "me!-me!-me!-me!" fight over your frail dignity you think you need to engage in.

Marie Claude on :

then what are you doing but not being after me me me me me. Looks like you would want to close my mouth (like on your blog) on any appreciation about EU policies. Sure you know better than us that are living in Europe, also, if the Blog owner didn't appreciate my interventions, he would have likely banned my IP, so far I get emails for warning me that new topics are on ! Anyway, I know you, and whatever I say will not find a record in your entendment, and you know ? I fichtre don't care !

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