Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
I'd personally take a little issue with how you characterise German actions. I don't say that they did the right thing, but we should understand some of the pressures on them.

France has a certain level of unemployment. We've discussed the unreliability of the figures, so let me just say that like all economies they feel like they could use a bit less unemployment, but my overall perception is that unemployment is not seen as a major emergency for policy over the last few years.

Now, in "West Germany" I think you could make a similar case, but (even if we concede that the Eastern regions have less overall political clout) the unemployment situation in the East must be affecting policy.

Wage moderation may not be sustainable, but the alternative shifting from a medium-skilled (on average) high volume German economy to a higher-skilled, lower volume (on average) German economy doesn't look like it's politically sustainable in the short term. (After all, the Grand coalition isn't all that stable, IMO.)

I'll note in addition to Migeru's notes about high-end vs low-end etc. that I'll ring my usual alarm bell:

High end employs less people. This is a problem that someone needs to actually address. Maybe there is no alternative but for us, as a whole to get poorer, but we should be managing this decline, else the resulting inequalities between a "skilled elite" and an "unskilled (and largely unemployed) mass" are going to be problematic.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Feb 5th, 2007 at 06:19:58 AM EST

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