1/11
Good article. While a 2021 current account surplus of 6.8% of GDP is better than the 8.6% it ran in 2016, the fourth largest economy in the world should not be running persistent surpluses anywhere near this level.
wsj.com/articles/germa… via @WSJ
Good article. While a 2021 current account surplus of 6.8% of GDP is better than the 8.6% it ran in 2016, the fourth largest economy in the world should not be running persistent surpluses anywhere near this level.
wsj.com/articles/germa… via @WSJ
2/11
They create huge problem for the rest of the world, and especially for Germany's European partners. I am surprised there hasn't been a lot more pushback from the countries who have had to absorb the bulk of the country's beggar-thy-neighbor policies.
They create huge problem for the rest of the world, and especially for Germany's European partners. I am surprised there hasn't been a lot more pushback from the countries who have had to absorb the bulk of the country's beggar-thy-neighbor policies.
3/11
Germany’s current account surplus is 2-4 times the levels that Japan and China are running. Even if the surplus does decline to 5.5% in 2022, as @TomFairless suggests here, this is still irresponsibly large, and the world should not be forced to absorb it.
Germany’s current account surplus is 2-4 times the levels that Japan and China are running. Even if the surplus does decline to 5.5% in 2022, as @TomFairless suggests here, this is still irresponsibly large, and the world should not be forced to absorb it.
4/11
Some people argue that the surplus is a consequence of Germany’s industrial success, or as Fairless puts it, the surpluses “are popular at home as a symbol of industrial strength and global competitiveness.”
Some people argue that the surplus is a consequence of Germany’s industrial success, or as Fairless puts it, the surpluses “are popular at home as a symbol of industrial strength and global competitiveness.”
5/11
But of course this is nonsense. As the head of Berlin think tank DIW points out, “the problem is not so much that Germany is exporting too much but that it is importing too little,”. The reason it is importing too little is obvious: German workers get paid less relative...
But of course this is nonsense. As the head of Berlin think tank DIW points out, “the problem is not so much that Germany is exporting too much but that it is importing too little,”. The reason it is importing too little is obvious: German workers get paid less relative...
6/11
to their productivity than workers in most other advanced economies. Germany’s trade surplus, in other words, is not a sign of industrial prowess so much as an indication of the ease with which German bosses have suppressed the relative wages of German workers.
to their productivity than workers in most other advanced economies. Germany’s trade surplus, in other words, is not a sign of industrial prowess so much as an indication of the ease with which German bosses have suppressed the relative wages of German workers.
7/11
In Germany, as in the US and everywhere else, it is easier for businesses to boost profits by suppressing wages – in the name of international competitiveness – than by investing in productivity enhancement.
In Germany, as in the US and everywhere else, it is easier for businesses to boost profits by suppressing wages – in the name of international competitiveness – than by investing in productivity enhancement.
8/11
The slow growth in German productivity in the past decade, especially relative to the surge in both business profits and the trade surplus (and both caused by the direct and indirect suppression of wages), demonstrates this pretty clearly.
The slow growth in German productivity in the past decade, especially relative to the surge in both business profits and the trade surplus (and both caused by the direct and indirect suppression of wages), demonstrates this pretty clearly.
9/11
The solution is obvious: pay workers a fairer share of their production, either directly, or by investing in their productivity, or, as Achim Truger, one of economic experts who advise the German government, makes clear in the article:
The solution is obvious: pay workers a fairer share of their production, either directly, or by investing in their productivity, or, as Achim Truger, one of economic experts who advise the German government, makes clear in the article:
10/11
“By keeping more of what is produced in the domestic economy and giving it to the people, and not having these huge surpluses, we can have a much higher return than the old model.”
“By keeping more of what is produced in the domestic economy and giving it to the people, and not having these huge surpluses, we can have a much higher return than the old model.”
11/11
Will German businesses be forced to return part of their excess profits to German workers, even though the rest of the world seems willing to absorb Germany’s deficient domestic demand? I guess we’ll see how the new government responds.
Will German businesses be forced to return part of their excess profits to German workers, even though the rest of the world seems willing to absorb Germany’s deficient domestic demand? I guess we’ll see how the new government responds.
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