Germany vs. US

No not war, but the two different approaches to the recession. You may not remember, but this administration wanted Europe, and especially Germany, to provide more stimulus money. Dr. Gary Becker compares the two approaches and outcomes .

  • Germany stimulus package – 1.6% of its GDP
  • Germany’s fiscal deficit – 5-6% in 2010, smaller than the fiscal deficits in many euro-zone countries.

Contrast with US:

  • American stimulus package – 6% of American GDP, ~4X relative to GDP as the German stimulus.
  • American fiscal deficit – 2009 and 2010 – about 12% of American GDP, far larger than the fiscal deficits Germany has been running.

Germany has recently taken actions to cut spending and raise some taxes, while the US government continues to think of ways to increase government spending, as if the huge fiscal deficit is not enough.

Here is the part I like.

I continue to believe that the biggest factor in the sluggish employment recovery of the US is that many of the actual new and proposed anti-business legislation, as well as the large fiscal deficits, made businessmen and investors cautious about taking on new workers. These proposals and laws include the health care bill, the pro-union bias and anti-business rhetoric of Congress and the president, suggested increased taxes on higher earners, changes in anti-trust laws to be less pro-consumer, and the endlessly complicated and largely misplaced financial “reform” law. Germany, by contrast, has continued with the same coalition government headed by the mainly pro-investment, pro trade Christian Democrats. Germany surely made various mistakes during this recession, but the US has made many more.

The first part of the paragraph is UNCERTAINTY, albeit as written by a Nobel Prize winning PhD. Were my grandfathers still alive, they would have said sometime ago, “Good God, its another FDR! Better rein this in quick, AND NO THIRD TERM, or we will be in another Great Depression!

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