In its recent “Report to Congress on International Economic and Exchange Rate Policies,” the U.S. Treasury blasts Germany for embracing an export model of economic growth and blamed the country’s economic policies for “dragging down its neighbors and the rest of the global economy,” according to the Wall Street Journal.
As the report states, “Germany's anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment.”
If you needed any more evidence that this administration has a fundamentally flawed approach to economic growth, its scolding of Germany should do it.
To begin with, the criticism comes from an administration that itself set the doubling of U.S. exports as a goal—a goal that remains unrealized.
Why it’s a good idea for the U.S. to try and greatly expand its exports, and a bad idea for Germany to actually do it is a mystery.
Germany has managed to make products and services that businesses and consumers in other countries want to buy, and the U.S. is criticizing the country for that success.
Following its wholesale embrace of Keynesian economics, Treasury encourages the German government to boost consumer demand—by which it means that Germans should be buying other countries’ exports.
There’s some good economic reasoning for you: Force consumers to buy products they don’t want, and forego better products they do want, in an effort to boost the economy.
And the notion that Germany is dragging down the Euro Zone is delusional.
It was German support that kept Greece and other socialist-leaning EU governments from defaulting. It was Germany that has driven EU economic growth for the past several years. And it was Germany that forced the high-tax, big-spending EU members to adopt some fiscal restraint—restraint that the Obama administration refuses to embrace.
The German model is, at least in part, the solution, not the problem. The fact that the Obama Treasury Dept. doesn’t recognize that is a strong indicator that the U.S. is in for three more years of stagnant growth and failed economic policies.
As the report states, “Germany's anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment.”
If you needed any more evidence that this administration has a fundamentally flawed approach to economic growth, its scolding of Germany should do it.
To begin with, the criticism comes from an administration that itself set the doubling of U.S. exports as a goal—a goal that remains unrealized.
Why it’s a good idea for the U.S. to try and greatly expand its exports, and a bad idea for Germany to actually do it is a mystery.
Germany has managed to make products and services that businesses and consumers in other countries want to buy, and the U.S. is criticizing the country for that success.
Following its wholesale embrace of Keynesian economics, Treasury encourages the German government to boost consumer demand—by which it means that Germans should be buying other countries’ exports.
There’s some good economic reasoning for you: Force consumers to buy products they don’t want, and forego better products they do want, in an effort to boost the economy.
And the notion that Germany is dragging down the Euro Zone is delusional.
It was German support that kept Greece and other socialist-leaning EU governments from defaulting. It was Germany that has driven EU economic growth for the past several years. And it was Germany that forced the high-tax, big-spending EU members to adopt some fiscal restraint—restraint that the Obama administration refuses to embrace.
The German model is, at least in part, the solution, not the problem. The fact that the Obama Treasury Dept. doesn’t recognize that is a strong indicator that the U.S. is in for three more years of stagnant growth and failed economic policies.