Transcript Germany
Germany • Soziale Marktwirtschaft (Social Market Economy) • State control and private enterprise supplement each other • Growth and productivity are to be balanced by social equity • Mittelstand • Open economy Compared to Sweden and Japan • • • • Banking Exports Labor management Welfare http://www.odci.gov/cia/ publications/factbook/ge os/gm.html Origins of SMW • Freiburg school of neoliberalism: the state could and should intervene in the market matters and be held responsible for social agenda (intellectual) • Postwar political environment of demilitarization and direct controls (Erhardt as an advocate of decontrol) Germany compared • National economic goals are written into laws like price stability, a stable currency,full employment, b.o.p equilibrium, and stable economic growth • National social goals are social equity, social security, and social progress Characteristics of SMW • Sanctity of private property • Market allocation unless a serious conflict with social objectives • Konjunturrat and fiscal policy • Anti-inflationary monetarism • Enforcement of competition German welfare • • • • Security of employment Protection of employees Insurance against risks Improvement of income distribution • Other early introduction and comprehensiveness (1/3 of GDP) German welfare • Not progressive taxes but transfers and subsidies, insurance, and profit sharing • Capital formation (savings premiums, health insurance and tax breaks) Mitbestimmung(codeter mination) • Representation of of workers, extended to all industries since 1976(compulsory for +500 employees): industrial democracy • Workforce on both sides of collective bargaining • 2/3 shareholders and ½ workers and unions representatives • Wages, workday length, firing, layoffs Unions as exception to anti-cartel law • No closed shops • Industrial unions • 40% unionized Public enterprise • Denationalization (compared to Great Britain prior to the 1980s) German Unification • West Germany and the fading of the Economic Miracle • Capital tock destruction amd monetary overhang • Ordo-liberal favoring markets but expecting the government to enforce competition German Unification continued • Eurosclerosis • The social safety net and nativity • Decentralized welfare East Germany • National socialism • Marxism • 1953: the gap in income has widened due to the Soviet reluctance to build up defeated country • Warsaw Pact 1955 and CMEA East Germany continued • Kombinaten(1979) and technological intensification • East and West compared • General production and consumption • Standard of living • Environmental quality Costs of unification • Big bang • 1 to 1 exchange rate (wild DD overvaluation)and unemployment • Interest rates and macroeconomic credibility • Pre-existing financial and legal infrastructure • Women in labor force • Collapse of domestic demand in the East due to competition from the West German and European Unification • Centrifugal forces (The leadership role and supranationality issue between Germany and France) • Centripetal forces (world trade and challenges of NAFTA and China)