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  • Is Germany Flat-lining?

    Posted by Ginny on March 3rd, 2005 (All posts by )

    Came across a Kate Connolly article in the News Telegraph,
    “Ailing Germany Slides Down Economic League”
    . (Noted by Powerline.) She argues that Germany’s per capita purchasing power parity has remained static since 1995 and is projected to do so to 2015. I am curious and wonder if the wise men of our blog can tell me how accurately this chart reflects reality. On the one hand, I’m constantly surprised by the quantities of time each year Germans find to vacation. While this seems a quite pleasant lifestyle, it doesn’t seem a productive one. On the other hand, unless I’m missing it (and it’s late and I may have), I don’t see any indication that the rather massive costs of its reunification with a not quite modernized East Germany made any differences. Surely that affected all these stats in important ways, ways in which the last ten years might not so successfully predict the next ten?

     

    6 Responses to “Is Germany Flat-lining?”

    1. Jonathan Says:

      German costs are high, due in part to those vacations, also to the reunification, which was mishandled, to a backward regulatory and business climate that discourages business startups, to labor laws that discourage hiring when times are good and make it difficult to fire inefficient workers, and to high taxes to pay for the other stuff. There’s no mystery about any of this.

      What will happen in the future is a different matter. The charts in the Telegraph article merely extrapolate from current trends and are probably way off (because predictions of this type are usually way off). What will actually happen depends on the German political environment, which of course is dynamic. If the German political leadership continues doing business as usual, then Germany will continue to slide economically relative to more-competitive countries. But it would take no more than election of a reformist govt, some sincere tax-cutting and regulatory relief, and the economy could turn around within a couple of years. It’s all about the incentives.

    2. Giles Says:

      Although Germany is close to flat lining – the Germany = 100 is a normalisation i.e in 1995 is per capita was 26,000 and 29,0000 in 2005, they renormalise to 100 to show how its falling behind relative to other countries.

    3. Sandy P Says:

      The people aren’t willing to make the sacrifice, do what needs to be done.

      There’s an article in the FT about Spain – they might have to throw off the Euro and let their currency float.

      They’re losing jobs, too.

    4. Sandy P Says:

      Besides, we know Germany will pull out of it’s funk when they start selling arms to China.

      I’m surprised he hasn’t been to Venezuela yet.

    5. David Foster Says:

      BusinessWeek had a very interesting article synthesizing demographic data with productivity data…the idea was to estimate the rate of productivity growth required in each of several countries in order to deal with the changing age mix of the population. Worst off was Germany, with 2% required growth vs 1.5% trendline. Britain, by comparison, was 1.7% required vs 1.9% experienced.

      http://photoncourier.blogspot.com/2005_02_01_photoncourier_archive.html#110770835365957302

    6. Carol Herman Says:

      The Huns are flatlining. Can’t make me mad. Reminds me after the Romans saw to it that the wood was provided for Christ’s Cross. And, then, 30 years later,tore down and burned the Jewish Temple on the Mount in Jerusalem; guess what I saw when I looked at a timeline map?

      Year for burning down the Temple? 77 AD

      Year for Pompeii? 79 AD

      Okay. We can quibble. Pompeii had a destructive earthquake 19 years before Vesuvius blew its top. But Rome? Sank. Now, you’re telling me after the Holocaust the Huns are having troubles?

      Let me point to their ways. And, what they chose. Because they had dynamite arts, science and literature going for them; well above that of the rest of Europe. But they weren’t happy. Had to tamper with God’s children.

      Some people not only never learn. They forget to teach their children.