23
May

LESSONS FROM THE FUTURE PAST: GERMANY

Escrito el 23 mayo 2009 por Miguel Aguirre Uzquiano en Economía Global

I indulge myself to take  as a loan idea the  great article wrote by Peter Gumbel in Time magazine

 

After all the solution to the actual crisis come from huge packages of money,  put by all the different governments all over the world into the economy , there is a case we could look after: The reunification of Germany in 1990 and the two  decades after. 

 

 Although there is a big difference with the situation today, the objective then was political and economic, and  now the key purpose is to obtain some economic success in the biggest business downturn of half a century. 

For Germany USD 2 trillion allowed first a big a necessary development in the infrastructures –very important if your are the biggest exporter of the world; second it developed a encouraged business tradition in the east Germany –most of Europeans now want to obtain a public job- and third the industry obtained growth using a developing for green technology- giving the local industry a decade advance with the other Ocde countries regarding green technology.

 

In the opposite side the big spending didn’t bring a job creating scheme in the east- so stimulus packages don’t reduce unemployment?-;they created a lot of houses that didn’t find an owner in the subprime bust – and finally spending with no particular criteria in the 16 federal states made successful regions less profitable and many places pleased to have subsidies  for life.

 

After twenty years from that lesson and assuming that from a political point of view the reunification was a success, Germany now is victim also of the downturn in the world economy and the government is predicting a 6% decrease in the national economy in 2009 (EU will decrease in average 4,2).

New billion packages will bring a change of turn or it will bring more people relaying and expecting to obtain state aid  and wait for better times?

What we did learn from the German case?

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