by Jerome a Paris
Mon Oct 2nd, 2006 at 06:48:06 AM EST
Wolfgang Munchau in the FT
There is a tale, told by people who should know better, according to which Germany’s economic recovery is the fruit of reforms undertaken in previous years.
(...)
The story is as intuitively appealing as it is wrong.
Growth that comes in the absence of "reforms" is cyclical, temporary, and, frankly, undeserved.
During the 1999-2000 boom, the Schröder government did not undertake nearly enough economic reforms to improve the country’s economy’s resilience. When the downturn finally came, it was unnecessarily hard. When people look at 2007 and beyond, they remember 2002 and 2003.
(...)
In the meantime, expect more bragging by European politicians about the salutary effects of economic reforms. This is not a tale told by an idiot. It is a convenient tale by those who tell it. The truth is not that good economic reforms are finally paying off. The truth is that many good economic reforms have still to be undertaken in the first place.
But the sad part about politicians bragging about reforms is that they are also buying the message that "reform" is good and a worthy goal (like dictators like to pretend they are really democrats and organise sham elections, thus acknowledging that democracy is the better system and pretending to be one).
There is an opening for a mainstream politician to suddenly say loudly that "reform" is a sham and that other policies need to be promoted. Who will take it?