Deutschland Uber Alles!

[Megan Robinson]

I was wondering why democratic-socialism is working for Germany and France. I've taken German since I was a freshman in high school, and every german teacher I've had praises the socialist system in Europe. The obvious problems are apparent as far as freedom is concerned, but the Euro is doing so well. Does anyone know why?

[MisterSwig]

I was wondering why democratic-socialism is working for Germany and France. I've taken German since I was a freshman in high school, and every german teacher I've had praises the socialist system in Europe. The obvious problems are apparent as far as freedom is concerned, but the Euro is doing so well. Does anyone know why?

Do you believe everything your German teacher tells you?

Seriously, what makes you think socialism is responsible for whatever worth the Euro has? Have you ever considered the fact that Germany and France are not--yet--100% socialist?

Ever heard of capitalism?

[Tom Rexton]

I was wondering why democratic-socialism is working for Germany and France. I've taken German since I was a freshman in high school, and every german teacher I've had praises the socialist system in Europe. The obvious problems are apparent as far as freedom is concerned, but the Euro is doing so well. Does anyone know why?

France, Germany and many other Western European states are not, strictly speaking, "socialists"; that is, not all the means of production is owned by the state, and neither are their economies "centrally planned". Western Europe is fundamentally a capitalist market, albeit a far more hampered one than the United States.

Immediately after WWII, much of Western Europe underwent radical deregulation and privatization, leading to a sustained "economic miracle" that dramatically and rapidly raised Western European living standards. This is the primary reason Western Europe has such a high living standard today--not because it has gradually imposed more and more laws and regulations that have slowly but surely slowed and then finally stopped economic progress altogether, ultimately leading to the decline it has experienced for more than a decade now.

And no, Western Europe is not "doing so well". Much of Western Europe is stagnating or already well into decline.

[BurgessLau]

I was wondering why democratic-socialism is working for Germany and France. I've taken German since I was a freshman in high school, and every german teacher I've had praises the socialist system in Europe. The obvious problems are apparent as far as freedom is concerned, but the Euro is doing so well. Does anyone know why?

Your question is an appropriate one. The basic problem is one you will encounter throughout life: the problem of mixtures. Some individuals have mixed philosophical premises -- some good premises and some bad premises. We must judge them for what they are: good, bad, and mixed.

Whole societies are the same way, mixed. The U. S. in its earlier years was mixed. It had a system of government that was a revolutionary advance toward freedom. And it sanctioned slavery for an unconscionably long time. Today's culture in the U. S. is similarly mixed.

If you read news accounts during the last few years -- for example, in the Wall Street Journal and New York Times -- about the economy in Germany, you will find that Germany's economy is dynamic and advanced compared to hell-holes like the Congo. On the other hand, the heavy hand of control and bureaucracy and welfarism is slowly eroding German economic strength. This shows up in battles between unions and socialistic governments. The latter are gradually realizing that they cannot continue to expand welfarism without destroying the goose that lays the golden eggs. So there are brief periods of slight deregulation, enough to revive the economy. And then they find some new "need" to fill, and expand the welfare state.

The amount of statism in the U. S. is less than in Europe, but that is only a matter of degree. Keep in mind that mixed economies -- part capitalism and part statism -- are inherently unstable. They tend to move in one direction or another. Sometimes they go in both directions at the same time, but in different sectors of the economy. E.g., in the U. S., while the federal government was increasing controls on hiring practices (to stifle "discrimination"), the same government was moving the national passenger train service toward more independence.

That is the way societies are generally, and we have to learn to recognize the sometimes conflicting underlying essential characteristics that cause the mixed results.

[unskinned]

What about the fact that they are under the American defense umbrella? Has Euro defense spending even approached that of the United States over the past 50 years? No wonder they have money to burn.

[Colonel Rebel]

yah, it's worked well for Germany, right? All those millions of immigrants pouring into the country, taking up healthcare for the Germans, man...it's sure doing wonders!

[DavidOdden]

The explanation is simple. It is a testament to the success of capitalism that even though the German economy is semi-socialist, it has not collapsed entirely. The wealth that capitalism has created is so great that it can be spread around liberally like pig flop on a beet field, and still the country survives.

When East Germany is fully renovated, I will be very interested to see what happens. I was in Leipzig in 1996 and again this summer, and it is stunning how much construction they are doing and how much they've done since the liberation. But this will have to end at some point, and the piper will have to be paid. The problem seems to be that they've pumped huge amounts of money into projects in the east -- only investors are not flocking there, as expected. I wonder why. It's a really nice place to be: lots of sidewalk cafes, very fresh, modern facades on the buildings. What more could anyone want?

[Toolboxnj]

The Economist had a special report on the EU 2 weeks ago. I suggest people give it a read.

TB

[RadCap]

Megan

I have to ask you to check a couple of your premises:

- Please tell me WHAT STANDARD you use to justify your claim that socialism is 'working' in Europe.

- Please tell me what you define as 'doing well' - specifically when it comes to Europe. When doing so, please provide some examples of such 'doing well'.

Additionally, since your comments proceed from the premise that Europe is doing better than you estimate it should given that it is socialist, please state where you would EXPECT it to be instead. Again, please provide some examples

[Michelangelo]

Do you believe everything your German teacher tells you?

Seriously, what makes you think socialism is responsible for whatever worth the Euro has? Have you ever considered the fact that Germany and France are not--yet--100% socialist?

Ever heard of capitalism?

I thought this forum was to educate people who are serious about Objectivism? I don't see how your condescending post fits that criteria.

[Socionomer]

Communism was also "working" in the USSR and East Germany. That is until it stopped working.

The currency markets are dynamic. When the EU first adopted the Euro it traded below the US dollar for quite a while. There are many reasons for currency fluctuations. A strong currency does not always accurately reflect economic strength in the nation that issues it.

[A.West]

Germany is closer to socialism than the U.S. You can check overal levels of economic freedom at: http://cf.heritage.org/index2004test/country2.cfm?id=Germany

Germany has had below average economic growth over the past 10 years. Even

Socialist Party members are beginning to acknowledge that its labor regulations are overly restrictive, resulting in poor employment and welfare spending numbers.

However, there are some people who still defend Germany's socialist policies even though impartial observers would say it has underperformed economically over the past 10-15 yrs. Those are the people who want to defend employees from having to face global economic changes and competition, and just want to preserve their priveleges on the back of those who suffer from the system, and there are those who prefer the enforcement of altruist policies as "moral" even when it conflicts with economic growth. (There is a significant Green Party element there that favor slower growth, and would like to just redistribute the wealth and industrial base that already exists in Germany).

Your teacher probably is thinking back 15 years ago when economists like Lester Thurow applauded Japan and Germany for their government "industrial planning" and "lifetime employment" policies. Even since then, each of those "model countries" has underperformed in global economic terms.

The Euro vs. Dollar movement is a very complex thing to analyze, but I don't think any examination of the past 5 yrs of US$/Euro movements would lead one to draw a positive conclusion regarding Germany's socialist/welfare state tendencies. That's like pulling something out of a hat and hoping it quiets the opposition.

[Megan Robinson]

Thanks for your input. I realize that I often compare countries to the US forgetting that we're quikly becoming the USSA. The Germans in general seem to be happy with giving up their liberties, and this is really the baffaling part. Thats what it seems... but if you know otherwise, please let me know.

I have another question:

The personal freedom for germans is limited economically (they pay 70% of income in taxes and their education system is completely socialized.) But I suppose the biggest question from a macroecon stanpoint would be the taxes on businesses. Does anyone have any info/an opinion on that?

[A.West]

The link above indicates the corporate tax rate is not unusually high. However, keep in mind that the government prefers taxation through regulation, with lavish pension & retirement benefits, barriers to entry and exit, short work-weeks and long vacations, regulations against firing workers that are no longer necessary, and probably numerous add-ons like unemployment, social security, dividend tax, etc. So a tax rate in Germany isn't necesarily comparable to a tax rate in the U.S. What matters is the total cost and attractiveness on doing business, not just the income tax.

[the tortured one]

to quote the lovely Ms. Rand: "Achieving life is not equivalent to avoiding death."

Sure Germany is working in the sense that they haven't reverted to a barbaric dark age feudalism, but have you looked at any of the economic figures of Germany? Their Per Capita GDP (the average annual salary) is around 15,000 U.S dollars. 15,000 dollars is pebbles, the American Per Capital GDP is nearly double Germany and Frances.

and for the record the country with the highest per Capita GDP is also the most economically free country in Europe: Luxembourg. Luxembourg's Per capita GDP is even higher then the U.S's!

IIRC, the three countries with the highest per capital GDPs are

1. Luxembourg

2. United States

3. Hong Kong

these three countries are also among the top 10 most economically free countries in the world.

have you all ever heard of France's war on Incentive? They are enforcing the 35 hour work week to the point where the police are going into businesses and forcing people to stop working.

We could live in Mediocrity, but I for one want to live to the fullest of my extent.

John Stossel once did an excellent report on this. He compared the United States, Hong Kong, and India. I forget the name of the article but I will post it's name as soon as I can come up with it.

[A.West]

Sure Germany is working in the sense that they haven't reverted to a barbaric dark age feudalism, but have you looked at any of the economic figures of Germany? Their Per Capita GDP (the average annual salary) is around 15,000 U.S dollars. 15,000 dollars is pebbles, the American Per Capital GDP is nearly double Germany and Frances.

I am seeing Germany per capita gross national income at about $25k, vs $37k for the U.S. in 2003 at the World Bank site. Germany GDP per capita is slightly higher. Neither are exactly equivalent to average annual salary, because total production counted this way is not equal to total salaries.

Germany is by no means a poor country. They were once among the richest, but have decided to focus on redistributing "slices of pies" rather than making more pies, and are thus gradually falling behind due to slow growth. Rather like the lazy heirs to an immense fortune, wasting that wealth on charities and modern art rather than continuing to compound the wealth through greater production.

[the tortured one]

$37,000? I've never seen figures that high. Most figures I have seen place America around the 30,000 range. That's the figure's Stossel gave in that article I mentioned.

Perhaps my numbers are a little out of date? Perhaps I will collect more sources?

[A.West]

Keep in mind different people cite different statistics like GDP per capita, GNI per capita, median income, and all can give a different ranking depending on that country's economic structure. Here is the World Bank data source I referred to, you can look up definitions too :

http://www.worldbank.org/data/countrydata/countrydata.html

Here are good resources, with slightly older data (typically a 2 year lag), but with a focus on economic freedom:

http://www.heritage.org/research/features/.../countries.html

http://www.freetheworld.com/index.html

[oldsalt]

A West: Thanks for the links.

None of the figures tell the whole story, of course. They don't tell us of the impending change in demographics from the low birth rate of Europeans and the increased immigration of Muslims into all of Europe. The majority of the immigrants live on welfare. When their economies implode from the increased pressure of the costs of all their social programs, it will be devastating.

The eminent Middle Eastern and Islamic scholar, Dr. Bernard Lewis, wrote that Europe would be Muslim by the end of the century, at the latest. This is nothing new, but Europe seems afraid to do much about it -- with cause, I might add. They have much to fear from a financially dependent, but culturally unassimalated population.