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I am increasingly convinced that the low "productivity" (defined as euros of output per euro of wages or hour of work) is the result of chronic underinvestment in physical plant. German wages are higher than peripheral wages, so the high productivity is obtained with an even higher value of output.

The point is that a worker working with their bare hands is going to produce less output than a worker working with proper tools. So underinvestment in physical capital results in low labour productivity.

But all the Serious People think the problem is the workers.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed May 18th, 2011 at 10:41:23 AM EST
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