Tuesday, November 16, 2004

The new economics

It's a country whose products are known and respected, whose engineering is renowned; from electronics to machinery to component and consumer goods its economic landscape features world industry leaders. Germany is one of the world's greatest exporters; just a couple years ago, it surpassed the USA for the first time. With a highly educated work force and the largest economy in the eurozone, on the surface it would appear perfectly positioned for success. We know that this isn't the case in practice.

If you were asked just where Germany's present-day economic woes stem from, what would you say? Perhaps you'd say that the Soviet collapse dried up East Germany's industrial client base, and they still haven't recovered. You might say that Kohl torpedoed what was left of East Germany's industry when he integrated West and East currency at an equivalent exchange. You could point a finger at the wage controls which pin Germany's wages at one of the highest rates in the world, the giant annual cash transfers from the west that provide a pseudo-economy to the east, persistent unemployment, or the exorbitant welfare state. But what would the German Finance Ministry say?

Wait for it.

It's America's fault.

Germany blames strong euro on US policies

BERLIN, Nov. 13 (Xinhuanet) -- A senior German official has blamed the financial policies of the Bush administration for the strong euro hurting European economies, according to the German weekly "Der Spiegel".

In its latest issue to be published Sunday, the weekly quoted Caio Koch-Weser, a state secretary of the German Finance Ministry,as saying that the double deficits in the US budget and trade had worried the market, leading to the depreciation of the US dollar against euro.

Koch-Weser urged the Bush administration to change its financial and economic policies and launch a "middle-term, sustained budget consolidation".

Lest anyone need a reminder, this admonishment comes from a country that penned the Euro Stability Pact, and will not abide by it in order to put forth stimulus tax cuts.

[Nov. 2003] German Chancellor Gerhard Schröder on Wednesday defended a decision to suspend the EU’s deficit rules in order to promote euro zone growth. But he also told parliament that Germany would continue budgetary consolidation.

Addressing parliament during a debate on the 2004 budget, Schröder said Berlin needed to give priority to bringing forward planned tax cuts by one year to help get Europe’s largest economy back on track.

“We need consolidation without question,” Schröder said. “But we need to stimulate growth. We have to pull these tax cuts forward to support growth.”

For those of you who thought that only France could manage world-class hypocrisy - think again. The other half of Europe is pretty good at it too.

Update: I should have presumed that Medienkritik's already been here.


Blogger andy said...

It really is amazing how these Western European countries can placate their unemployed masses as stop rioting in the streets about the high rates by simply blaming the US for everything. It really is amazing. Really.

10:09 PM  
Blogger andy said...

Ah, here is the article I cut out. I knew that sometime, somewhere, it would come in handy. It's called "Halting French Economic Thrust". From the Washington Times. It says that there is a war going on between a French-led high tax alliance and the US and it's free market allies.

"The French are well aware that their economy and those of other statist European countries perform relatively poorly because they are noncompetitve with lower-tax-burden countries". OK, so far so good. But of course what is the French response? Lower taxes to compete? Nope, guess again. Right: "actively try to force others to raise taxes so they might also have stagnant economies".

They try to hide this agenda by calling for "Tax harmonization", basically trying to get all countries to have the same tax rates. But at HIGH rates like the French.

Further states that "French and Germans" have "demanded" that the newer (eastern Europe) members of EU "raise their tax rates under the threat of not being allowed all the benefits other EU countries enjoy." Would high unemployment and poor economies be a few of those benefits?

Article goes on to blast the OECD (the Paris based Organization for Economic Cooperation and Development) and how France has hijacked this "concern" to promote their tax harmonization agenda.

Sorry, its a clipped article, and once again, I don't have the date written on it... so I can't supply a link...But I did find it in the pile in the corner....its still there if anyone wants to look....

10:24 PM  
Blogger Doug said...

Never fear, Doug is here! L'article.

This seems to fit well one of my notions of the genesis of anti-Americanism - that the existance of America and it's success is a repudiation of socialism. The need to denigrate America is less animosity than it is an attempt to speak in favor of systems that are even worse. To level the playing field in the mind, in much the same way that "tax harmonization" would do in reality.

3:05 AM  
Blogger andy said...

As luck would have it there is yet another editorial in the Washington Times today about our friends at the OECD. So, the Bush tax cuts here were not the only ones. Says that “there have been a number of major tax cuts in Europe” compared to a percentage of the gross domestic product.

Also: “Interestingly, European tax cuts have included meaningful cuts in individual income tax rates for the rich—the most controversial element of Mr. Bush’s program…”

Rates on the rich in France went from 61.25% to 56.09, Germany from 53.8 to 51.17. The OECD reports the US rate fell from 46.51 to 41.42 (including state and local taxes).

More data about Dividend taxes and Value added taxes is pretty interesting as well.

Article is called “Tax Cuts Going Continental” by Bruce Bartlett in Washington Times 11/17/2004. I was going to link, but my browser seems all screwed up here at work. I’ll try to link when I get home. (yeah, I know, doing this on the companies dime…..)

4:14 PM  
Blogger andy said...

Here is link of above article:
Read it here

9:35 PM  
Blogger Doug said...

38.8 percent of GDP! I can't even imagine our government with like 5 trillion in revenues. Besides bailing out the companies that were strangled and people who were rendered jobless, what would we even do with it all? Actually, that's probably about all we could do with it...

11:34 PM  

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