This article discusses Germany's austerity measures and the recent push for more public spending. What do you think Germany should do? What would the costs/benefits of increased public spending be for Germany and the rest of Europe?
I feel like this action, in some way, is hypocritical to the policies that Germany runs with other countries and with the Euro. I think that it important to recognize that spending will, inevitably, lead to inefficiencies.
I agree with Colin in that the policies seem a bit hypocritical given Germany's position in re of all the other european countries. That said, I'm Keynesian about this: Germany has avoided the brunt of the recession thus far, mostly because they had solid economic fundamentals. But now that they are approaching a recession in full, it is smart to advance some stimulus measures.
Also, look at the difference between the US and the UK (and much of europe): the US' first reaction to the recession was stimulus, while in the UK the went with austerity. Now the UK is flailing while the US is showing steady, albeit small, signs of recovery.
Germany seems to me to be the only government that can actually afford to increase its spending. I understand that as it stands the government already does a lot. Its economy will be positively impacted by an increase in minimum wage. After all the country is trying to encourage economic activity from its women. Most countries in Europe cannot have such long term polices because they don't have the means and their people just wont allow them to. I think this is a great move by Germany.
I feel like this action, in some way, is hypocritical to the policies that Germany runs with other countries and with the Euro. I think that it important to recognize that spending will, inevitably, lead to inefficiencies.
ReplyDeleteI agree with Colin in that the policies seem a bit hypocritical given Germany's position in re of all the other european countries. That said, I'm Keynesian about this: Germany has avoided the brunt of the recession thus far, mostly because they had solid economic fundamentals. But now that they are approaching a recession in full, it is smart to advance some stimulus measures.
ReplyDeleteAlso, look at the difference between the US and the UK (and much of europe): the US' first reaction to the recession was stimulus, while in the UK the went with austerity. Now the UK is flailing while the US is showing steady, albeit small, signs of recovery.
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ReplyDeleteGermany seems to me to be the only government that can actually afford to increase its spending. I understand that as it stands the government already does a lot. Its economy will be positively impacted by an increase in minimum wage. After all the country is trying to encourage economic activity from its women. Most countries in Europe cannot have such long term polices because they don't have the means and their people just wont allow them to. I think this is a great move by Germany.
ReplyDelete