Save a lot and spend a little surplus Germany hurt the global economy

Save a lot and spend a little surplus Germany hurt the global economy



7/15/2017 0:00

Economist-translation / Khaled Qassem magazine
when major economic powers met in Hamburg, the theater was ready for a confrontation between America defending protectionism Germany and pro-free trade. Trump criticized Berlin because of its trade surplus , which reached $ 300 billion last year, the world 's largest (China 's surplus of $ 200 billion).
The fact is that Germany save a lot and spend a little, and the size of those savings makes them inappropriate for an advocate of free trade. The trade surplus is to increase national savings on domestic investment, while in the case of Germany , this is not a result of the commercial policy of the government as some foreigners complain, and does not reflect the urgent need for an advanced society in the age to garner more as government officials confirm. Household saving rate is stable, albeit high, years ago it increases in national savings came from the companies
and the government.
German is the primary surplus ten - year - old agreement between the companies and unions in favor of curbing wages in order to keep a competitive export industries. This moderation served as Germany 's economy export well throughout the recovery after the war and beyond, a natural ability explain the transformation of Germany since the end of the nineties of the sick man of Europe to champion reviewing
his muscles.
German model contains a lot of pros, Valtjans between companies and workers is one of the main sources of the superior performance of the economy. Companies can invest without worry of blackmail unions have, and the state role played by sponsoring a respected vocational training system. In America Valavaq available to men without college degrees worsened along with the decline of manufacturing jobs, which is the cause of economic nationalism espoused by Trump.
But the adverse side effects of the model is increasingly clear, and left the German economy and world trade is dangerously unbalanced. Curb the decline of wages mean domestic spending and imports, consumer spending has only dropped to 54 percent of gross domestic product , compared with 69 percent in America and 65 percent in Britain.
Exporters do not invest their profits is expected in their country, and Germany is not a single, Switzerland, Ms. Modée . Sweden Denmark and the Netherlands have accumulated large surpluses as well. It puts the current account surplus above 8 percent of gross domestic product is unreasonable pressure on the global trading system for a large economy with low unemployment.
It requires compensation of those surpluses and maintain a total sufficient demand to keep people in their jobs, to borrow the rest of the world and spend as much of the lack of a reservation. Persistent deficits have led to crises in countries such as Italy, Greece, Spain, and resulted from the subsequent transformation towards surplus heavy price.
Merkel 's government should spend more, turning the budget deficit exceeds 3 percent of GDP in 2010 to a small surplus. So officials describe wisdom, but it is difficult to accept this view because of the high savings of the private sector. Germany has many worthwhile projects to spend money on them, there is a deterioration in school buildings and roads because of the pressure on public investment, and the economy lag behind in the field of digitization. Merkel is absolutely right publish free trade message, but she and her sons need Fahman surpluses of Germany itself is a threat to the legitimacy of that trade.

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