First paragraph I can agree with pretty well.
But you don't need to share a currency to have artificially cheap exports, do you? Selling things at a discount is usually very easy to accomplish.
But you don't need to share a currency to have artificially cheap exports, do you? Selling things at a discount is usually very easy to accomplish.
It's not just the currency though. The "German model" has been to keep wages depressed. That's also how their exports are "cheaper". Make no mistake the result has been to enrich German capital at the expense of labor (even German labor).
https://www.economist.com/leaders/2017/07/08/why-germanys-cu...
https://theconversation.com/questioning-the-claim-of-germany...
I don't see how that stops them from selling things at the same price as ever, denominated in a neutral currency.
> It's not just the currency though. The "German model" has been to keep wages depressed. That's also how their exports are "cheaper".
Paying your workers less does make things cheaper, so I'm not sure why you used scare quotes.
Germany's personal savings rate is about 10.x%. The US - infamously tilted toward consumer spending - is actually not far behind at 8.x% (up from a low of 2.2% in 2005).
Wonder how much of that is healthcare and education which is wayyy expensive in US.
it's simply a cultural preference. Germans have accepted lower wages for general full-employment and job security even in times of recession. It is exceedingly rare for qualified German workers to ever have to switch jobs during economic downturns because the somewhat lower levels of negotiated pay give companies breathing room to act socially equitable.
the hire and fire and short-term consumption mentality that dominates american labour contracts has never been perceived as desirable in Germany.
They haven't really, they ended up giving up more and more job-security, with stagnating wages, to keep the sham of "full employment" going. Something that's been especially affecting West Germany since reunification, where previously wages were extremely high.
But contrary to popular belief, even in Germany the labor markets were quite "liberalized" over these last couple of decades [0].
Nowadays plenty of low/middle-class Germans having to work two part-time jobs and still receiving government assistance, or unemployed people getting "loaned out" by the Arbeitsagentur to private companies as cheap 1€ labor force [1].
With programs like those, it's not very difficult to make your employment statistics look amazing: On paper barely anybody is actually unemployed because in reality most of them are "hidden away" in pointless training programs or straight up subsidizing the labor costs of private companies.
[0] https://www.diw.de/documents/publikationen/73/diw_01.c.56768...
[1] https://en.wikipedia.org/wiki/Working_opportunities_with_add...
Germany's middle-class relatively speaking to many other countries is still fairly intact which is reflected in the low priority that class issues or employment has in German politics. Not many people in Germany fall into the 1$ job market, and it should be pointed out that (IIRC) as time went on the majority of part-time jobs has converted into full-time employment.
Employment is pretty much one of the main topics of German politics. High employment needs to be presented even if those employed can't even live from that income. While the low-income issue has been ignored with "Be glad you got at least some work!". As German culture is very quick and harsh to shame people for not working a job. Which has been one of the factors the AfD played on:
Many low and mid-income Germans feel like they've been missing out, the German right has pitted that feeling against the arriving refugees in a "We don't have money for German pensioners [0], but we do for Syrian economic migrants?!" way.
As such I never declared the German model as dead, I was merely pointing out that it ain't as perfect as many people from the outside often perceive it to be. There's a whole lot of shining up the numbers going on, not just in terms of "who counts as unemployed", but even with "who counts as poor/low income". [1]
[0] https://www.zeit.de/wirtschaft/2019-02/altersarmut-rente-arm...
[1] https://www.deutschlandfunkkultur.de/der-geschoente-armutsbe...
However fiscal transfers between the two states (I.e. taxes -> welfare payments, labor standards etc) mean that the cheaper goods are more likely to be up to standards and that Alabamans can buy California almonds and Roku boxes. (This is one way cutting welfare hurts capitalism). The EU has no such fiscal mechanism thus the process drifts out of a crisis.
Germany’s Länderausgleich is actually more extensive than the US’s, which has made its economy so strong for so long, yet the country is loath to extend its benefits (much of which would flow back to Germany!) to the rest of the EU.
These exist EU wide you know.
Additionally money is allocated to poorer regions to develop industries, not welfare payments but still wealth redistribution.
Edit: oh I see that poor editing on my part implied that labour standards were part of fiscal transfers, a nonsensical connection. My apologies)
As a former EU resident of two different countries I have benefitted from EU labor laws.
Regional development funds are practically below the noise floor as a part of the Zone’s GDP (and are in fact EU-wide, not just eurozone-wide). Most of the money is squandered (not necessarily through corruption, just lack of macro efficacy) as it’s such a small amount it gets little attention.
I assume the downvoting comes from economics being a popular topic on which people like to opine whether or not they understand it (insert joke here about economists being subject to this rule as well)
After all, the US is a single country, with common news reporting, a common language, common political systems and parties, common tax enforcement and so on.
I mean, if an Alabamian thinks that Californians are all surf bums he can find employment statistics for both states gathered under identical standards, read press coverage in his language, and even move there if he feels like it, as he already knows the language.
It seems unlikely the EU will ever achieve that level of integration.
> It seems unlikely the EU will ever achieve that level of integration.
I disagree but it's unlikely to happen in my lifetime.
Hopefully this threat of recession will light a fire under the correct asses.