Praising Germany’s economic model

The German economy is an example of free market and therefore of respect for individual freedom. Its economic policy is backed by a majority of the population, no matter their political sign, just as the Americans have this sense of homeland, whether they are Democrats or conservatives. It is a question of culture. A culture that can be acquired.

Where do the problems of the peripheral economies come from? Interventionism, in which “Daddy-State” aims to supplement individual freedom and implement a directed thought and impersonate the individual. The trap is always the same: the word social, which “Socialists of all parties”, as Hayek called them, use. Wealth is distributed protecting the weakest instead of encouraging him, wages are (over all) too high and not linked to productivity, fiscal policy is damaging both the rich and the poor, Social Security contributions are extremely high and markets become a mere pantomime.

And speaking of markets, financial markets, which are so necessary to the companies, are interested in satisfying the State, buying all the debt it requires and producing a crowding out effect for families and businesses, since the State leaves no room for them accessing to credit.

Germany, with its free-market, easy hiring policies, betting on export and investment (and not public spending), reducing public debt and training workers is doing more for the common good than interventionist peripheral countries where the word ‘social’ is only creating misery?

Besides, Germany invests much of its savings in its neighbors, favoring their expansion and promoting employment (with its own austerity). Thus in addition to ensuring its welfare state (not a factory of dreams: I dream and the state gives me), they provide for peripheral states. That is why is in Germany’s best interest that those countries don’t go bankrupt.

What happens is that the austerity demanded by Germany to those countries, which it is nothing more than Germany had to do when other countries were living a full orgy of borrowing, is not being applied where it truly should. Austerity is pushing on the weak, encouraging political patronage, not helping workers, eliminating their freedom, pensions are lowered, payments are eliminated, suppliers are not being paid, with the consequent closure of companies, unemployment and evictions. One in four companies closed for non-payment of the public sector.
And it is about the political class itself, their privileges, the oversized state, the enormous amount of public enterprises and organisms without content which serve as shelter for their affiliated politicians, where austerity should be put in place.

The Spanish State, at all administrative levels, spends 490 billion euros every year, which represents 46% of the national GDP. This astronomical figure is not reduced because that would mean dismantling the current power structure.

Peripheral countries must bury Keynes and take their hands off the economy, let it go by itself. Wealth is created by people, and employment is brought by companies.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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