In a strange piece in today's New York Times, reporter Daniel Gross compares Germany to US auto parts manufacturer Delphi Inc, which this week filed for Chaper 11 under the US bankruptcy code:
But two seemingly unrelated changes last week demonstrated how the world's largest economy, the United States', and the third-largest one, Germany's, are dealing with, or failing to deal with, a fundamental challenge: how to outsmart globalization.
On Oct. 8, Delphi Inc., the largest auto parts company in the United States, filed for Chapter 11 bankruptcy protection, citing, in part, the high cost of its American workers, who earn as much as $65 per hour.
And on Oct. 10, Germany threw in the towel on its election - the one that was supposed to push Germans into confronting their stagnant economy. Instead, Germany's two largest parties, with differing goals, agreed to form a coalition government under the leadership of Angela Merkel. Any true reckoning has been put on hold.
Gross mentions that he recently toured Germany, and he recently met with Delphi's management, so this unimaginative piece is the result. The Times has often written about Germany's economic problems and sees the US model as the only way to adapt to globlization. In other words, the solution is to impoverish the workers, and encourage them to take on debt to raise consumption.
High taxes in Germany are often mentioned as a cause for inhibiting investment in the country. But as the economist Joachim Jahnke shows on his Web site, Germany alreadly has relatively lower taxes than most other EU nations.
Indeed, Germany does have a lower rate of direct income tax, and lower rates elsewhere also.
Reading the Economist you'll note that they state the German economy is the strongest it has been in years, and Germany is the export god of the EU.
Where exactly did this chappie do his touring?
Pi.
Posted by: Pi. | October 16, 2005 at 07:49 PM