Where Germany, U.S. differ: How much should government steer the economy?

The Washington Post ^ | JUNE 7, 2011 | Jia Lynn Yang

[MinorityRepublican]

German Chancellor Angela Merkel arrives at the White House.

At the White House on Tuesday, German Chancellor Angela Merkel represented a country that boasts the very things President Obama desperately wants as he seeks reelection: record-low unemployment, a strong manufacturing base, and growth that has returned to levels from before the global recession.

Although U.S. policymakers say they’re running low on ammunition to jump-start the economy, the German government has been aggressively instituting policies aimed at protecting jobs — and they’ve worked.

The difference, say some experts, is that the German government has been unafraid to pursue policies that induce companies to preserve high-paying jobs and boost exports, embracing two words that can make lawmakers in Washington recoil: industrial policy.

In the United States, actively interfering in the affairs of big companies to save jobs is a line many politicians are unwilling to cross.

“There’s a pervasive sense in the United States that government and the economy are supposed to be completely distinct and separate realms,” said Jacob Kirkegaard, a research fellow at the Peter G. Peterson Institute For International Economics. “During a deep recession, the fact that you have a more activist government has some advantages.”

In 2009, the German government created a job-sharing program called “Kurzarbeit” in which companies agreed that instead of laying off workers, they would cut back their hours, with the government making up the difference in pay. Germany replaced lost income for at least 1.4 million workers. While they were off the job, many of them took training classes.

[kittymyrib]

And for all their efforts, Germans now get to bail out the feckless Greeks, Portugese and Irish. It hardly seems worth it.

[bill1952]

In the United States, actively interfering in the affairs of big companies to save jobs is a line many politicians are unwilling to cross

Bahawahahaha!!!

GM
Chrysler
Banking
Insurance

[Chi-townChief]

Ach du lieber!!! Maybe we can get the Deutschlanders to foot the bill for being under our defensive umbrella for the past 65 years.

[Soothesayer9]

"In 2009, the German government created a job-sharing program called “Kurzarbeit” in which companies agreed that instead of laying off workers, they would cut back their hours, with the government making up the difference in pay.

The very definition of "robbing Peter to pay Paul".

[Revolting cat!]

Anybody who thinks that the U.S. “steers” the economy less than the Germans, I have a bridge over a creek in central Nevada for sale. Sarbanes-Oxley, remember? Frank-Dodd. Daily issuance of regulations and rules, IRS, calls for favors from the likes of Honorable Congressman Wiener and the like? Want more?

Sarbanes and Oxley made the entire IT Dept where I worked in a publically traded company work for the government part of each day.

[freedumb2003]

>>The very definition of “robbing Peter to pay Paul”. <<

Or robbing Dieter to pay Klaus...

[Mr. Peabody]

This is kind of stupid.

[Senator John Blutarski]

I might be wrong, but based upon what I have been told over the years by German business colleagues and friends, this article has taken the German situation and turned it inside out and upside down to present a completely false picture. Germany before the current economic recession had a persistent structural “official” unemployment rate of about 9 pct and a “real” unemployment/underemployment rate probably double that figure. German employment “rights” then were so potentially expensive to employers that staffing levels were as a rule kept absolutely as tight as possible.

[freedumb2003]

>>Sarbanes and Oxley made the entire IT Dept where I worked in a publically traded company work for the government part of each day.<<

SOX — the “Multi-billion Consultancy Full Employment Act.” After 20+ years of trying to identify and deploy best business practices, a few gonifs come along and create make-work activities with no real value.

And I am a consultant. Thank God I am not on that side of the house.

[GOPBlonde]

It seems like Merkel asked Obama to help shoulder the Greek bailout. Why should the US have anything to do with helping Greece when it’s an EU problem, and we’re having our own terrible fiscal problems. But it seems as if Obama is promising the EU some Greek bailout monies. Americans should be outraged!

[Melas]

No, the Germans do steer their economy to a greater degree, and it’s debatable if we should or not. For one the Germans don’t fear the word ‘tariff’ that keeps German companies in Germany. In my not so humble opinion, it wouldn’t hurt us to make outsourcing a little less desirable.

[Revolting cat!]

In my not so humble opinion, it wouldn’t hurt us to make outsourcing a little less desirable.

Don't be so humble, that's where all of our jobs have gone. The economy is growing but, surprise, surprise, no jobs are being added here. They're all in India (7% economy growth), China (5%, figures from memory.)

As for gummint regulation, sure, stores closed on Sundays in Germany, lots of other BS regulation, but we have our equivalents, I'd argue. And Sarbanes-Oxley is really one of the main causes of outsourcing, I think.

[sickoflibs]

RE :"Although U.S. policymakers say they’re running low on ammunition to jump-start the economy, the German government has been aggressively instituting policies aimed at protecting jobs — and they’ve worked. The difference, say some experts, is that the German government has been unafraid to pursue policies that induce companies to preserve high-paying jobs and boost exports, embracing two words that can make lawmakers in Washington recoil: industrial policy. "

Germany has a trade surplus with China showing that it is possible. The workers did not get greedy and demand too much. Plus they didnt center their whole economy around building housing and government jobs, a sure fire way to throw a party that cant last and always ends in a hangover. Our solution? Start drinking again in the morning and assume there is no tomorrow.

Do you hear the Germans crying : "Waaa, we cant compete" ?

[Marine_Uncle]

This country’s Congress’s and Whitehouse’s of recent times have done their best to allow for huge portions of industries to move elsewhere for a number of all stupid reasons. Now we pay the pied piper. Tis time for me to hit the rack. Do have a great upcoming day.

[MinorityRepublican]

they didnt center their whole economy around building housing and government jobs

That's probably it. Same thing with Canada. Anyway, we haven't felt "real pain" yet. But it's inevitable whether it's tomorrow or we kick the can a couple years down the road.

[re_nortex]

Should fearlessness and good sense ever prevail here (2012?) then these key policies will become reality:

1). Right to work (ending forced unionism) countrywide.

2). Abolishing of the minimum wage.

It will take genuine courage to enact both of these but the reward will be substantial as America comes roaring back economically, leaving the BRIC countries and Germany in our dust.

Sure, we need to defund the EPA, OSHA, EEOC and countless other useless agencies that place burdensome regulations on entrepreneurs but making unions irrelevant and allowing salaries to react to the realities of the marketplace are two attainable goals.

These union states are holding our entire country's economic growth in check.