"Anti-Krugmanism" in Germany?
"Anti-Krugmanism is working right now in Germany."
That's what commenter "Samuel" from Orlando wrote at Krugman's blog today, and it's utter nonsense. Yes, we Germans disagree with Mr. Krugman about the need for more stimulus for our economy right now. And we have good reason for this, since everybody can see that our industries are already working near full capacity, and our domestic demand has increased recently, too. The influential German weekly Der Spiegel even speaks of a "Keynesian Success Story"! So, as we see it, Krugman simply didn't pay enough attention to the different conditions here, where our still strong social net automagically stabilizes demand, and dampens recessions. Also, while our government had to come up with some austerity plans, to reduce our budget deficit to the EU standard of below 3%, and because of foreign relation reasons, too (we can't lecture the Greek when we ourselves live beyond our means), in reality the effect of these measures is miniscule. It's more PR than a serious reduction of governmental services.
So, no Anti-Krugmanism here, but actually policies in place that are much more in line with Keynes, and Krugman's advices, than everything in the US! That the good Prof himself somehow still tried to talk us into even more stimulus, despite the data showing this is unnecessary, and despite the political problems attached to this, is only evidence of a temporary disagreement, not of a general rift.
The situation in the US, on the other hand, is totally different. You don't have the same kind of social net working as a safeguard against economic downturn. So, America does need an additional stimulus to boost domestic demand. The horrible employment numbers show the necessity. And to say that the US should act like Germany, even though the conditions are totally different, is really a fundamental misunderstanding. If the US would firstly copy the German social net, then this would be debatable. But I guess if the WH would really try to implement our kind of social market economy in the states, "Samuel" would be among the first to cry "COMMUNISM"!
(Based on a comment at Krugman's blog)
That's what commenter "Samuel" from Orlando wrote at Krugman's blog today, and it's utter nonsense. Yes, we Germans disagree with Mr. Krugman about the need for more stimulus for our economy right now. And we have good reason for this, since everybody can see that our industries are already working near full capacity, and our domestic demand has increased recently, too. The influential German weekly Der Spiegel even speaks of a "Keynesian Success Story"! So, as we see it, Krugman simply didn't pay enough attention to the different conditions here, where our still strong social net automagically stabilizes demand, and dampens recessions. Also, while our government had to come up with some austerity plans, to reduce our budget deficit to the EU standard of below 3%, and because of foreign relation reasons, too (we can't lecture the Greek when we ourselves live beyond our means), in reality the effect of these measures is miniscule. It's more PR than a serious reduction of governmental services.
So, no Anti-Krugmanism here, but actually policies in place that are much more in line with Keynes, and Krugman's advices, than everything in the US! That the good Prof himself somehow still tried to talk us into even more stimulus, despite the data showing this is unnecessary, and despite the political problems attached to this, is only evidence of a temporary disagreement, not of a general rift.
The situation in the US, on the other hand, is totally different. You don't have the same kind of social net working as a safeguard against economic downturn. So, America does need an additional stimulus to boost domestic demand. The horrible employment numbers show the necessity. And to say that the US should act like Germany, even though the conditions are totally different, is really a fundamental misunderstanding. If the US would firstly copy the German social net, then this would be debatable. But I guess if the WH would really try to implement our kind of social market economy in the states, "Samuel" would be among the first to cry "COMMUNISM"!
(Based on a comment at Krugman's blog)
Labels: austerity, germany, keynes, krugman, social net, stimulus
posted by Gray | 8/17/2010 01:48:00 PM
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