The NYT ran an article testifying to Germany’s successes in managing the downturn, and their consequent pride in getting the “right economic model”.
Of course, there are benefits to their “short work” program of reducing workers’ hours instead of letting go of workers entirely–mainly that the workers’ skills do not wither away. But fiscal austerity–the main economic model being touted–is the wrong reason to attribute Germany’s relative success to.
Should every country embark on a direction of fiscal austerity, Germany’s only source of success–export led growth–would not have been possible. In other words, Germany’s relative success is a consequence of the spending of the rest of the world–Germany sucked hundreds of billions of dollars in demand from the rest of the world, and contributed none of its own.
Don’t get me wrong–Germany is a great export economy. It produces the goods, like machinery, cars, and other feats of engineering, that are demanded everywhere. I just hope that it and everyone else can see that while tightening their purses may have positive individual impact, on the whole it just makes the downturn worse.
Any fiscal stimulus to counteract a large downturn like we recently experienced needs to be coordinated and have full cooperation among the large economies. Otherwise, the single country that chooses to veer off-course will suck the demand generated by everyone else, and render the plan useless as a whole.
Germany, please do not have the hubris to believe that what you did is “the” solution. It may only work for you because you choose to harm your neighbors for your own benefit. But it is wrong to tell the world that you have found the solution.
Because you have not.