Monday, March 2, 2015

Bill Mitchell — Germany is not a model for Europe – it fails abroad and at home

Some time ago I wrote a blog – The German model is not workable for the Eurozone (February 3, 2012) where I outlined why Germany’s export-led growth strategy could not be a viable model for the rest of the Eurozone nations. More recent data shows that Germany is not even working very well in terms of advancing the prosperity of its own citizens. A recent report (in German) – Der Paritätische Gesamtverband (HG): Die zerklüftete Republik (The Fragmented Republic) – shows that poverty rates are rising in Germany and there is now a dislocation emerging between unemployment and growth and poverty rates. The reason is clear – too much neo-liberal labour market deregulation and ridiculously tight fiscal policy. Both failing policies that Germany continues to insist should be adopted throughout Europe. It would do the other Member States a service if they banded together and rejected the ‘German poverty model’.

In the early 1980s, Germany embraced the growing neo-liberal myth that the alleviation of poverty was a participatory enterprise – that the poor had to develop their own productive capacities to get themselves out of their situation. That the Government could do very little.
The German Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) (the Federal Ministry for Economic Cooperation and Development) set up a national task force to develop the concept that individuals had to take responsibility for their own poverty fight before external help would be forthcoming. 
The BMZ was influential in OECD and World Bank policy shifts in this regard. It has also been a major player in the –United Nation’s Millennium Declaration – in 2000 and the subsequent – Millennium Development Goals (MDGs) – which have defined the global fight against poverty since 2001. 
For reference to the BMZ approach, see their 2010 document – The Millennium Development Goals: Background – Progress – Activities BMZ Information 
At the time of writing, there were 303 days, 9 hours, and 36 minutes (and some seconds) to go before the end of 2015 when the 189 nations that signed up to the Declaration will conclude whether they have been the Eight MDG targets. 
None will go close! 
The Germans are heading in the wrong direction....
Bill Mitchell – billy blog
Germany is not a model for Europe – it fails abroad and at home
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia


Matt Franko said...

I'd like to see what happens to them if the iconic German auto brands lose all of their cachet-rent with the next generation coming up....

They may have to compete their C-class/3-series with a well equipped Honda Accord on price...

Ignacio said...

Matt Mercedes engines are crap compared to what they used to be! Poor quality and dropping standards because 'competition'.

Race to the bottom because "poors have to take responsibility and stop being poors".

Matt Franko said...


May be some sort of generational thing many older us citizens served in the military in Europe (Germany) so could be some sort of nostalgia at work with older folks that will be missing in millenials. ..

Imo the brands are associated with "old farts".... same thing going on with McDonald's young people dont want to go there for food that brand is in trouble too

The Germans may have to knock about $10k off these mid size sedans to compete and their net export surpluses are going to collapse...