To Grow or not to Grow

Depending on where you get your news from, Germany’s economy will either grow by 3% this year (if you trust the German government) or contract by 1.4% in Q4/2011 alone (if you trust the OECD).

Given that austerity measures are being put into place in Europe these days in ever bigger economies (Italy, France, Spain and even more in Greece) one wonders where the German government gets its confidence from. Germany has developed an economy that is dependent on exports to the European Union, mostly because it followed the merchantilistic policy of depressing real wages to become more “competitive” in unit labour costs. There is nothing to its domestic economy that could sustain any kind of growth. Whatever confidence the German government has in economic growth must be an outgrowth of the (local) election campaigns in the German Bundesländer (federal states).

In short:

Don’t trust your government during, before and after election campaigns. Or in other words: Don’t trust your government. Which is a sad state of affairs in any Democracy – but has become a universal phenomenon. After all the political lies and distortions reality has become something so unsettling that the public is not to be trusted with it.

And try to consult international news about your own country – no matter which country that is. The tangle of lies, half-truths and omitted truths is often impenetrable from the inside – but you might gain some valuable insight from an outside perspective. Or at least you will end up being thoroughly confused – which is a state preferable to the state of mind politicians would need to be in, in order to believe in what they are saying.

One thought on “To Grow or not to Grow

  1. Hi, I did econ at university in the US. I’m trying to sift through all of the “crap” and misleading news and trying to arrive at a destinational question: Why do you and a few others say a depression is on the horizon? If it will come, how bad will it be?
    I think it might get that bad, what with the systematic (at least western civilization is united on this front) failure of western democracies’ governments to do something rational about this crisis. I feel that with the underreporting of unemployment, and possible attempts to gloss over how bad this crisis truly is, that you may be right.

    Another concern I have is that even if the world somehow lurches through this crisis, that there is a larger concern for the US, something I can’t believe no one is reporting or doing anything about: The millions of unemployed who lost their manufacturing jobs to mechanization or offshoring or outsourcing. These people cannot be allowed to become a permanent underclass, yet no one wants to help them in any way. I’ve heard what I believe to be very callous remarks that these people should’ve gotten educated better, planned their futures better, etc……..but considering that with increased technologization of so so so many things, will any job be safe down the road?

    I would love to hear your thoughts on this….And considering you know more in-depth about Germany (the wool was pulled over my eyes, I should’ve realized that all the information coming out of Germany regarding economic statistics must not be 100% true)…können Sie deutsch?

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