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Archive for the ‘Germany’ Category

Government, Geography, and Growth

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The True Drivers of Economic Development

According to the economist Daron Acemoglu and the political scientist James Robinson, economic development hinges on a single factor: a country’s political institutions. More specifically, as they explain in their new book, Why Nations Fail, it depends on the existence of “inclusive” political institutions, defined as pluralistic systems that protect individual rights. These, in turn, give rise to inclusive economic institutions, which secure private property and encourage entrepreneurship. The long-term result is higher incomes and improved human welfare.

What Acemoglu and Robinson call “extractive” political institutions, in contrast, place power in the hands of a few and beget extractive economic institutions, which feature unfair regulations and high barriers to entry into markets. Designed to enrich a small elite, these institutions inhibit economic progress for everyone else. The broad hypothesis of Why Nations Fail is that governments that protect property rights and represent their people preside over economic development, whereas those that do not suffer from economies that stagnate or decline. Although “most social scientists shun monocausal, simple, and broadly applicable theories,” Acemoglu and Robinson write, they themselves have chosen just such a “simple theory and used it to explain the main contours of economic and political development around the world since the Neolithic Revolution.” Read the rest of this entry »

Written by Theophyle

October 10, 2012 at 12:45 pm

The Washington Post: Germany offers vision of federalism for the European Union

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By Anthony Faiola and Michael Birnbaum

BRUSSELS — Political posters in Rome are comparing her to Hitler. A popular British magazine dubbed her “Europe’s most dangerous leader.” But could German Chancellor Angela Merkel — the frugal physicist foisting tough austerity on the region’s hard-hit economies — really be the most pro-European leader in Europe? Read the rest of this entry »

Written by Theophyle

June 28, 2012 at 9:26 am

WSJ-E: France is Main Obstacle to a Euro Solution

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Two statements last week following the four-way summit in Rome between the German, French, Italian and Spanish leaders capture the essence of the euro crisis and show why a solution is as far away as ever. Responding to the latest demands that euro-zone bailout funds be allowed directly to recapitalize Spanish banks, German Chancellor Angela Merkel replied: “If I give money to Spanish banks, I’m the German chancellor but I can’t say what these banks do.” Later, French president François Hollande was asked about his willingness to accept further political union as the price of greater pooling of debt, he replied: “There can be no transfer of sovereignty if there is not an improvement in solidarity.” Boiled down, this is a debate over whether Germany should write blank checks. Read the rest of this entry »

Written by Theophyle

June 25, 2012 at 8:46 am

It’s the Economy, Dummkopf!

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By Michael Lewis

With Greece and Ireland in economic shreds, while Portugal, Spain, and perhaps even Italy head south, only one nation can save Europe from financial Armageddon: a highly reluctant Germany. The ironies—like the fact that bankers from Düsseldorf were the ultimate patsies in Wall Street’s con game—pile up quickly as Michael Lewis investigates German attitudes toward money, excrement, and the country’s Nazi past, all of which help explain its peculiar new status.

By the time I arrived in Hamburg the fate of the financial universe seemed to turn on which way the German people jumped. Moody’s was set to downgrade the Portuguese government’s debt to junk-bond status, and Standard & Poor’s had hinted darkly that Italy might be next. Ireland was about to be downgraded to junk status, too, and there was a very real possibility that the newly elected Spanish government might seize the moment to announce that the old Spanish government had miscalculated, and owed foreigners a lot more money than they previously imagined. Then there was Greece. Of the 126 countries with rated debt, Greece now ranked 126th: the Greeks were officially regarded as the least likely people on the planet to repay their debts. As the Germans were not only the biggest creditor of the various deadbeat European nations but their only serious hope for future funding, it was left to Germans to act as moral arbiter, to decide which financial behaviors would be tolerated and which would not. As a senior official at the Bundesbank put it to me, “If we say ‘no,’ it’s ‘no.’ Nothing happens without Germany. This is where the losses come to live.” Just a year ago, when German public figures called Greeks cheaters, and German magazines ran headlines like why don’t you sell your islands, you bankrupt greeks? , ordinary Greeks took it as an outrageous insult. In June of this year the Greek government started selling islands or at any rate created a fire-sale list of a thousand properties—golf courses, beaches, airports, farmlands, roads—that they hoped to sell, to help repay their debts. It was safe to say that the idea for doing this had not come from the Greeks. Read the rest of this entry »

Written by Theophyle

September 18, 2011 at 9:46 am

Goodbye to Berlin

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German business and politics – Business bosses are growing impatient with a drifting government.

“I SUPPORT the euro, but not at any price,” said Wolfgang Reitzle, chief executive of Linde, an industrial-gas producer, in a recent interview. He is not alone. Many German business leaders are wondering if the apparently never-ending euro-zone bail-outs, to which Germany is the biggest contributor, are beginning to outweigh the (considerable) advantages of the single-currency area.

Their concerns are aggravated by what they see as political drift in Berlin. Many German bosses, say those close to them, have lost faith in the ability of Angela Merkel’s government to steer Europe out of trouble. Looking towards Berlin from their fastnesses in the Ruhr and southern Germany, they see only weak leadership, perverse decision-making and poor communication. These days many no longer bother making the trip to the capital. Read the rest of this entry »

Written by Theophyle

August 18, 2011 at 9:10 am

Germany Opposes Larger Rescue Fund

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BERLIN—Barely 12 hours after a reluctant European Central Bank breathed new life into the euro project, German politics dashed hopes that Europe would soon receive a bigger bulwark against a spreading government-debt crisis.

A spokesman for German Chancellor Angela Merkel, Christoph Steegmans, removed hopes of a more robust European Financial Stability Facility, saying the fund will stay as agreed at a July 21 European Union summit. “The EFSF will remain what it is, and keep the volume it had before July 21,” Mr. Steegmans said at a regular government press conference. Read the rest of this entry »

Written by Theophyle

August 8, 2011 at 5:41 pm

Germany’s Savers Clash With Bailouts

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By Laura Stevens

BERLIN—To better understand Germans’ unease over subsidizing their southern neighbors, consider Berliner Niko Strogies. The 28-year-old mathematician has never taken out a loan, rarely uses his credit card, and saves about 10% of his paycheck every month. He recently bought a car with cash. “I’ve never bought anything without having the money for it,” Mr. Strogies says. His behavior, multiplied across the population of Germany, Europe’s biggest economy, helps explain the economic imbalances that have fed the euro zone’s crisis. Read the rest of this entry »

Written by Theophyle

June 27, 2011 at 8:36 am