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That is in fact the neoliberal doctrine on the question, and is implicitly the German position : that the variable that must adjust is wages, in a downward direction for deficit countries.

There are a number of problems with that :

  • the moral problem that a mercantilist power is plundering the living standards of wage-earners in weaker countries (and that within a Union that purports to seek the improvement of living standards of all its members);

  • the "political" problem that the adjustment required is so brutal that those weaker countries may become impossible to govern (strikes, riots, instability), with uncertainty as to the final result (fascism, or, god help us, xtreme-left terra?);

  • the practical problem that wages don't just slide quickly and obediently down to provide a magic unicorn solution, as in the neolibs' dream world;

  • the "game" problem that Germany's reaction to increased competitiveness in partner countries (that hugely includes France) would be to hone its own competitiveness -- in other words, a downward spiral aka race to the bottom would be created, the bottom being somewhere adjacent to Chinese wages and living standards.

As Jake says, the only acceptable wage adjustment would be a rise in Germany.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Aug 29th, 2012 at 02:11:15 AM EST
[ Parent ]
I think one (short term, practical) question to ask is what set of policies would make life better for the ordinary/median German worker.

If German competitiveness has so far been bought at the cost of that ordinary worker's wage - what might be a different way forward?

by Metatone (metatone [a|t] gmail (dot) com) on Wed Aug 29th, 2012 at 03:37:47 AM EST
[ Parent ]
I think this ties into my diary about the 1970s, too.

How can we arrange an economy so that we get richer?

by Metatone (metatone [a|t] gmail (dot) com) on Wed Aug 29th, 2012 at 03:39:01 AM EST
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The goal should not be "be rich". We should eliminate the concept of "being rich". The problem is that the rich want to be very rich and those who have some money want to be richer. If "being rich" equals "having money", the sociopolitical goal will be have money, get the money: that's why we are in this crisis.

What should we understand by wealth in society without this crisis?

by PerCLupi on Wed Aug 29th, 2012 at 04:18:09 AM EST
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How can we arrange the economy so that we have a growing standard of living and declining poverty, and can sustain it long term?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Sep 1st, 2012 at 01:27:49 PM EST
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I agree, except that "honing comepetitiviness" need not be synonymous to cutting or stagnating salaries. It that were so, North Korea and Somalia would be the most competitive economies in the world.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Sep 5th, 2012 at 10:16:33 AM EST
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Tell that to the EU: Leaked: Troika requires 6-day working week in Greece (RT.com, 04 September, 2012)
A leaked email sent to the Greek Ministries of Finance and Labor from the Troika says Greek private sector workers should work six days a week and longer hours.

The letter, which was published on August 31, shows that the Troika expects the Labor Ministry to implement a number of other new measures. They include reducing the notice period before firing a worker, and cutting certain severance packages by 50 per cent by giving employers the right to reduce workers' time in service. Restrictions on overtime are also expected to come into effect.

"It also wants a dismantling of the labor inspectorate which is the public service that is responsible for implementing labor law. So it's not only about making the labor market more flexible," Panagiotis Sotiris from the University of the Aegean told RT.



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Wed Sep 5th, 2012 at 10:28:01 AM EST
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Heh. I wonder why they don't just outright demand that all Greek salaries are cut by 30% straight away. It would, after all, work.

For a very theoretical given value of "work"...

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Sep 5th, 2012 at 10:35:48 AM EST
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You have to start wondering what the "goal" is. The policy is not consistent with the stated goal, and after 3 years it's evident it isn't, in practice.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Wed Sep 5th, 2012 at 10:49:40 AM EST
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The goal is 'reform' - i.e. wealth capture by the rich.

The crisis is a convenient excuse to introduce 'reform' not a solution for it.

The problem it is a solution for - i.e. popular democracy, worker power, and security - is never stated explicitly.

The Econo and the various Neo-Lib rags haven't exactly been hiding the aim, although they have done an excellent job of misdirecting the media since 2008, when there was at least a small danger that things could go the other way and the vampires would have their fangs pulled.

Arguably 'reform' and the destruction of Social Democracy has always been the goal, from at least the time of Maastricht onwards.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Sep 5th, 2012 at 11:10:14 AM EST
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I'd say the goal and the plan is indefinitely kicking the can down the road while praying for divine intervention.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Sep 5th, 2012 at 11:17:16 AM EST
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Survive until 2013? What then?
by Colman (colman at eurotrib.com) on Wed Sep 5th, 2012 at 11:39:32 AM EST
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Then Merkel can start talking about the magical date of 2017.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Wed Sep 5th, 2012 at 11:53:00 AM EST
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I'm leaning towards the "bag of rats" theory, which I developed while involved in student politics.

I observed a tendency for a lot of the student union types to posit a "College" that was against them - in their minds there was a unified enemy  with a coherent plan to keep them down.

In fact, the various departments, academics and administrators were much more interested in fighting among themselves in order to maximise their own local and personal interests than in anything to do with bothering students.

I don't think there is a goal. There's a big mess and a lot of people, states and organisations trying to further their own agendas. Which, given the zeitgeist, is a recipe for horror.

by Colman (colman at eurotrib.com) on Wed Sep 5th, 2012 at 11:46:48 AM EST
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I may rewrite that in coherent English at some stage. WTF?
by Colman (colman at eurotrib.com) on Wed Sep 5th, 2012 at 11:55:04 AM EST
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Insightful. Good summary.

(Sounds like Ankh-Morpork.)

-----
sapere aude

by Number 6 on Fri Sep 7th, 2012 at 10:54:55 AM EST
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